TD Coin Upgrades Coca-Cola Rating Due to ‘Overreaction’ to Recent Share Price Drop By Investing.com

Investing.com – The decline in Coca-Cola (NYSE:) stock price is an “overreaction” among investors to the scale of concerns and concerns about the impact of the Trump administration’s upcoming trade policies, according to analysts at TD Coin.

The drinks giant’s CEO James Quincey warned in October that it was seeing a decline in its volumes in China and the Middle East. China, in particular, has been hit by a slow post-pandemic recovery that has affected consumer spending habits, while ongoing conflicts in the Middle East have slowed the flow of supplies to the region.

These comments sparked some concern among investors, with Coca-Cola shares declining at the time. The stock has since fallen about 9%.

However, Coca-Cola also said it was still aiming to reach the upper end of its 2024 organic sales forecast, thanks in large part to strong demand in the US despite a jump in prices for soft drinks and juices. Annual organic sales are now expected to increase by approximately 10%, compared to previous guidance of a 9% to 10% increase.

Meanwhile, average selling prices rose 10% in the third quarter, despite unit unit volumes falling 1%.

In a note to clients who raised their rating on Coca-Cola shares to “buy” from “hold” and reiterated their $75 price target, TD Cowen analysts led by Robert Moskov argued that Coca-Cola “continues to execute at the top of its price game” with repositioning actions. Successful franchisees in Vietnam, Philippines and India. In the United States, which accounts for about 37% of Coca-Cola’s total sales, execution has also been “excellent,” they said.

Analysts said the company’s size problems later became “temporary.” Meanwhile, separate concerns about the potential impact of the incoming Trump administration’s sweeping import tariff plans on foreign exchange rates and its operations in emerging markets are “ambiguous,” partly due to strength in Coca-Cola’s Mexico unit. Some of its competitors in the consumer goods space have pointed to potential economic pressures in the country due to Trump’s trade stance.

As a result, the recent decline in Coca-Cola’s stock price was an “overreaction,” they said.

“This creates an attractive buying opportunity in the stock with significant scope to benefit from growth in per capita beverage consumption in international markets over the long term,” the analysts said.