Coca-Cola Remains Stronger Post-Covid, Citi Says

Citi reports a stronger Coca-Cola post-Covid.

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Coca-Cola was named as one of the top buy-rated picks in the U.S. beverages and household products sector by analyst Filippo Falorni. The analyst set his price target at $68, which translates into a 14.8% upside from the closing price of $59.22 on Thursday. 

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Among the names that have been de-rated on near-term temporary concerns is Coca-Cola, which is offering a story of gross margin improvement with declining commodity prices, the analyst wrote in a note issued Thursday. 

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At an attractive valuation, the beverage giant "can navigate well through weaker macro conditions and/or offer compelling long-term growth stories."

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In the fourth quarter, Coca-Cola's revenue beat analysts' expectations, driven by higher prices for its drinks. China's reopening is likely to boost sales this year, even as European consumer demand is muted due to soaring inflation.

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“The company has emerged from COVID as a stronger organization with a more effective networked organizational model assisting in market share gains and innovation, as well as an improved margin structure as well as more efficient advertising spending,” wrote Falorni.

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"Near-term, we also see potential topline/EPS upside with momentum exiting Q4, strong pricing power, and strong emerging markets growth," the analyst concluded. “Because KO's topline growth is stronger and its margin profile is higher, we find its valuation to be compelling."

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Despite rising 7.4% in 2022, Coca-Cola shares have fallen nearly 7% since the beginning of the year.