Coca-Cola (KO) PT Lowered to $76 at BNP Paribas Exane, Remains Top Pick in Beverages

BNP Paribas Exane analyst Kevin Grundy lowered the price target on Coca-Cola (NYSE: KO) to $76.00 (from $78.00) while maintaining a Outperform rating.

The analyst comments "We edge FY25-26 EPS lower (stronger USD) and TP to $76 (prior $78) post KO's mixed 3Q, though the qtr. does very little to change our (+) LT thesis. It is an unforgiving market backdrop in staples for volume shortfalls as growth 'normalizes' (i.e., less pricing contribution as volumes recover). As a result, KO's 3Q price/mix driven OSG/EPS beat was overshadowed by modest volume downside (unit cases -1% vs Street +0.5%) and slightly more onerous FX expected for '25. However, w/ the bar now set for MSD % EPS growth in FY25 (~9-10% FX neutral) and KO at 24.5x P/E (~5% premium to 'core' basket), we still see the stock as a core holding w/ a best-in-class growth/financial profile. KO Delivers Mixed 3Q: Pricing-Driven OSG/EPS Beat; Volume Concerns Should Be Transitory KO's 3Q beat expectations at the top/bottom line (OSG +9% vs. Street's 6.3%; EPS $0.77 vs. $0.74), though the composition drew concerns. Volumes fell short (unit cases/ships -1%/-2% vs +0.5%/flat) with atypically better performance in DMs (NA, Europe, Japan, Australia) vs. EMs (Lat Am, India, China, ME). KO signaled improving volumes after a soft July and further normalization into FY25. FY24 OSG Guide Raised: Initial FY25 Forex Headwind a Bit Worse Than Expected FY24 OSG outlook now +10% (+9-10% prior), in-line with Street, largely due to price benefit from regions with 'intense inflation'. All-in EPS growth unchanged (+5-6%; implies ~$2.82-2.85 vs. Street $2.85), with better OSG generally offset by higher FX (i.e., 9 pts headwind to EPS vs. 8-9 pt prior). We see it likely FY25 Street EPS est. edge lower to ~MSD % growth (i.e., ~9-10% FX neutral). Edging FY25-26 EPS Ests and TP Lower on FX; KO Remains our Top Pick in Beverages We edge FY25-26 EPS ests. lower and TP to $76 ($78 prior), owing to more onerous FX. We value KO on a probability wtd. 15%/85% (+) / (-) legal outcome based on 25x CY3Q25 NTM P/E (currently trades at ~24.5x). Key tenets of our (+) thesis: (1) Best-in-Class portfolio, market share momentum & improved EPS delivery, 2) Emerging return of capital story (we est. 2% shares o/s p.a.) & improving financial profile with bottler refranchising, 3) Valuation attractive."

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