On Thursday, Citi updated its outlook for Coca-Cola (NYSE:KO) Europacific Partners (CCEP:NA) (NASDAQ: CCEP), increasing the stock price target to EUR79.00 from the previous EUR75.00. The firm has maintained a Buy rating on the stock. The adjustment comes after considering recent trading commentary from the company and current market conditions.
Coca-Cola Europacific Partners experienced mixed conditions in the third quarter (Q3), with supportive comments from management in August but adverse September weather in Europe, which is likely to have impacted delivery performance. Moreover, challenging comparisons in the Philippines were noted. Consequently, Citi has revised its Q3 group volumes growth estimate to +1.1% and organic sales growth (OSG) to +3.2%.
Following these revisions, Citi has also adjusted its full-year 2024 group OSG and organic EBIT growth forecasts to +3.5% and +6.5%, respectively, which is a slight decrease from the earlier projections of +4% and +7.5%. However, favorable foreign exchange rates have mitigated the impact on the company's earnings per share (EPS), with the FY24E EPS expected to be trimmed by roughly -1%, and the FY25E seeing marginal upgrades.
Despite the anticipated slower performance in Q3, Citi anticipates that Coca-Cola Europacific Partners' management will reaffirm its full-year 2024 guidance metrics when the Q3 results are released. Moreover, a FY dividend of EUR1.96 is expected to be announced. While acknowledging the structural medium-term appeal of CCEP, Citi suggested that the stock price might stabilize in the near term due to its strong performance in August.
In other recent news, Coca-Cola European Partners (NASDAQ:CCEP) faced a challenging second quarter due to adverse weather conditions, as reported by Barclays (LON:BARC) and Citi. Despite these obstacles, Barclays maintains an Overweight rating on CCEP, with a price target of $85.00, emphasizing the company's strong underlying demand and competitive positioning. The firm remains optimistic about CCEP's stability and future prospects, albeit with a slight adjustment in sales growth expectations for FY24.
Citi, on the other hand, maintains a 'Buy' rating on CCEP, with a price target of EUR75.00, anticipating growth in the Asia-Pacific South region. The firm expects a slight increase in first-half volumes, primarily driven by better performance in the Philippines. Both Barclays and Citi suggest that CCEP's management is unlikely to alter their full-year 2024 guidance at this time, with consensus estimates for EBIT growth in 2024 already exceeding the company's own guidance.
These recent developments reflect the resilience of Coca-Cola European Partners' business model and operational effectiveness amidst market fluctuations and a dynamic market environment.
InvestingPro Insights
To complement Citi's analysis of Coca-Cola Europacific Partners (CCEP), recent data from InvestingPro offers additional context. CCEP's market capitalization stands at $35.14 billion, with a P/E ratio of 19.81, indicating a moderate valuation relative to earnings. The company's revenue for the last twelve months as of Q2 2024 was $20.52 billion, with a growth rate of 6.31%, aligning with Citi's observations on the company's performance.
InvestingPro Tips highlight that CCEP has raised its dividend for 3 consecutive years, which supports Citi's expectation of a FY dividend announcement. The company's dividend yield is currently 2.03%, with a dividend growth of 6.76% over the last twelve months. This consistent dividend growth may appeal to income-focused investors.
While Citi anticipates a potential stabilization in stock price, it's worth noting that CCEP's stock generally trades with low price volatility, according to InvestingPro Tips. This characteristic could be attractive to risk-averse investors, especially given the current market conditions and the mixed Q3 performance outlined in the article.
For readers interested in a more comprehensive analysis, InvestingPro offers 6 additional tips for CCEP, providing a deeper understanding of the company's financial health and market position.
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