Coca-Cola shares are collection for a breakout thanks to successes abroad and its mission to expand its beverage lineup, according to Wells Fargo, which upgraded the share to outperform.
But probably most interesting in analyst Bonnie Herzog’s take note was first speculation that the 125-year-aged purveyor of sugary drinks may make a move into alcoholic beverages. She expects operations to create some hints of this at the business’s investor day on Thursday.
“We expect operations will highlight a whole lot of this innovation,” Herzog wrote on Monday, and also “expand on CEO [James] Quincey’s new commentary to: grow and incubate high-growth brands in the U.S. through its Venturing & Emerging Brands device (VEB); build and nurture tiny brands internationally, similar to what it has attained with success in the U.S. with VEB and through local partnerships; expand into various other high quality segments such as for example adult craft beverages.”
Wells Fargo raised it is 12-month price goal on the business to $51 from $45, representing 9 percent upside from Monday’s close.
A Coca-Cola spokesperson told CNBC that inquiries on beverage expansion will not be addressed until investor day.
The soft drink giant bought Fuze and Vitamin Water in 2007, Honest Tea in 2011 and Keurig Green Mountain in 2014. Coca-Cola that year as well had taken a 16.7 percent stake in Monster Beverage, a popular energy take in maker. But since then, Coke’s acquisition game-plan seems to have stalled.
In her list of key questions for administration on investor day, Herzog writes, “To what extent does KO plan to increase into adult craft beverages, and will that include alcoholic beverages (or just mixers)?”
Coca-Cola is the world’s major non-alcoholic beverage maker with a market value of $199.6 billion. AB InBev is the world’s major maker of alcoholic beverages with a market value of $197.2 billion. The maker of Budweiser simply just replaced its North America president in order to revive slumping beer sales.
Herzog also said Coca-Cola’s stake in Monster is a potential area for excitement, noting that the press has got been quick to jump on any signs of a good potential deal.
“We continue to believe Coca-Cola’s best-in-category distribution and strong company portfolio allows it to retain its high quality valuation and think that investments in efficiency and marketing today can pay off in years to come,” added Herzog. “We think Coca-Cola can support approximately 5 to 6 percent organic revenue growth over another several years, ahead of current consensus estimates.”
During the company’s upcoming trader day, the analyst as well expects the business enterprise to highlight diminished headwinds in Venezuela and Brazil, and cost savings in North America.
“With a new reinvigorated operations team, and renewed give attention to accelerating top-collection growth while maintaining self-discipline around costs, we believe Coca-Cola’s subsequent chapter of growth is just about the corner.”