On Monday, Coca-Cola (NYSE:KO) Europacific Partners (CCEP:NA) (NASDAQ: CCEP), a beverage giant with a market capitalization of $36 billion, received an upgraded stock rating from Morgan Stanley (NYSE:MS), moving from Equalweight to Overweight.
Accompanying this upgrade, the firm also increased its price target for the stock to EUR87.00, a significant rise from the previous EUR69.00. According to InvestingPro data, the stock currently maintains a strong "Buy" consensus among analysts, with an overall Financial Health Score of "GREAT."
The upgrade comes amid a positive performance for the company's stock, which has seen a year-to-date increase of 17%, although this trails behind the S&P 500's 28% gain. Morgan Stanley's analyst highlighted the potential for further growth, citing increased confidence in CCEP's fourth quarter of 2024 and the full year 2025 outlook.
The analyst also noted upcoming catalysts that could drive the stock's performance, including a likely inclusion in the FTSE 100 index and the anticipated resumption of share buybacks after several years.
Last week, at the Morgan Stanley Global Consumer & Retail Conference, CCEP's management expressed optimism about the company's trajectory, indicating a strong close to the year 2024. The analyst believes that CCEP is on track to meet its long-term growth algorithm, projecting a 4% increase in FX-neutral revenue and a 7% rise in operating income for 2025.
These projections are consistent with the consensus but are especially noteworthy given the current market environment where many consumer packaged goods (CPG) companies face uncertainty and risks to their estimates.
The firm's assessment also reflects a favorable view of CCEP's position following the US elections, as the company faces no direct tariff risks and has limited exposure to foreign exchange fluctuations. With a P/E ratio of 21.1 and impressive dividend growth of 81% over the last year, CCEP shows strong financial fundamentals.
Looking further ahead, Morgan Stanley sees unacknowledged opportunities for revenue and margin growth for CCEP in the Philippines and, in the longer term, in Indonesia. For a complete analysis of CCEP's valuation and growth potential, visit InvestingPro.
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