Investing.com – Coca-Cola’s (NYSE: ) stock price rebound is an “overreaction” among investors to volume concerns and concerns over the impact of the upcoming Trump administration’s trade policies, according to analysts at TD Cowen.
The drinks giant’s chief executive, James Quincey, warned in October that it was seeing volume declines in China and the Middle East. China, in particular, has been hit by a sluggish post-pandemic recovery that has weighed on consumer spending habits, while ongoing conflicts in the Middle East have slowed the flow of supplies to the region.
The comments sparked some concern among investors, with Coca-Cola shares sliding at the time. The stock has since fallen by about 9%.
However, Coca-Cola also said it was still pushing to hit the high end of its organic sales forecast for 2024, despite a jump in the price of its soda and juice amid strong demand in the US. thanks for Annual organic sales now appear to be growing around 10%, higher than earlier guidance for growth of between 9% and 10%.
Meanwhile, average selling prices rose 10% in the third quarter, although unit case volume fell 1%.
While downgrading their rating of Coca-Cola’s stock from “hold” to “buy” and reiterating their $75 price target, TD Cowen analysts led by Robert Mosco argued that Coca-Cola’s “top-of-the-line implementation of continues to do. its game” through successful refranchising operations in Vietnam, the Philippines and India. In the US, which accounts for about 37% of Coca-Cola’s total sales, its implementation is also “pending”, he said.
Analysts said the company’s volume issues were later “temporary”. Meanwhile, due to strength in Coca-Cola’s Mexico unit, separate concerns “remain” surrounding the potential impact of the Trump administration’s sweeping import tariff plans on foreign exchange rates and its operations in emerging markets. Some of its consumer goods opponents pointed to possible economic pressures in the country due to Trump’s trade stance.
As a result, the recent drop in Coca-Cola’s share price is an “overreaction.”
“This makes it an attractive buying opportunity in a stock with ample room to capitalize on growth in per capita beverage consumption in international markets over the long term,” analysts said.
