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Author: Alan LittleDate: 2022-01-05

Coca-Cola (KO) +1.67% as Guggenheim says current value is “compelling”

Coca-Cola (KO) traded higher in New York on Tuesday after Guggenheim set a buy rating for the soft drinks maker following a strong transition year in 2021.

Coca-Cola (KO) climbed 1.67% in Tuesday’s trading after Guggenheim said that the fizzy drinks maker is “leaner, and more agile” heading into 2022 as it pivoted from a neutral to buy rating.

Fresh coverage from analysts for big corps has been coming in thick and fast since the new year, and Guggenheim analyst Laurent Grandet weighed in on Coca-Cola’s prospects in a new research note on Tuesday.

He praised the Atlanta-based company’s transition during fiscal 2021, an overhaul that has streamlined operations while creating a portfolio of brands capable of driving efficiency during the next 12 months.

Grandet added: “The savings should help support marketing investments in ’22 back to ‘19 level which should benefit the top line.”

Coca-Cola is also seeing excellent growth in emerging markets, where a rebound in sales has been more pronounced than anticipated in recent months, even though vaccination rates in certain countries remain low.

Emerging markets now account for around a quarter of all sales and are growing faster than developed markets.

For investors, Grandet believes that Coca-Cola’s current value proposition is “compelling”, with his own estimates pointing to a 12% uptick in annual earnings through to fiscal 2023.

Grandet capped his new coverage by setting a more bullish buy rating and added $5 to his $61 price target.

Coca-Cola, which currently has a market cap of around $260bn, traded up in New York on Tuesday, with its 1.65% advance by mid-morning setting a $60.28 price.

Elsewhere, Apple (AAPL) became the first-ever company to hit a $3tn market valuation on Monday, and it was hovering around that milestone again on Tuesday despite dipping 1.09% to $180.02 early on.

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