Coca-Cola (KO) shares jumped on Monday after analysts at RBC Capital upgraded the beverage giant to outperform from sector perform as a COVID reopening play.
"Things have changed" since the investment firm downgraded the stock on Jan. 4, RBC analyst Nik Modi said. Consumers will be able to move around more freely, which is expected to benefit sales, the analyst said.
That mobility will be driven by better weather, reopenings, an end to stay-at-home fatigue, fairly efficient vaccine distribution, and better overall knowledge regarding protection against the coronavirus, Modi said, according to Bloomberg.
The firm raised its price target to $60 a share from $55. Coca-Cola shares at last check were 3.3% to $52.48.
Modi also expects Coca-Cola to be a stronger company post-pandemic due to organizational changes that the company announced in August last year.
Coca-Cola said it was trimming its structure to nine operating units. The company previous operated 17 units spread over four geographical segments.
Last month, the Atlanta company reported better-than-expected fourth-quarter earnings.
Coca-Cola reported net income of $1.46 billion, or 34 cents a share, compared with $2.04 billion, or 47 cents, in the year-earlier quarter.
Excluding special items, the latest earnings came to 47 cents a share, topping the 42 cents expected by analysts surveyed by Refinitiv.
Revenue totaled $8.6 billion, down 5% from a year earlier. Wall Street was looking for revenue of $8.63 billion.
Coca-Cola noted in its release that it expects a liability of about $12 billion related to a dispute with the U.S. Internal Revenue Service on how much it charged foreign affiliates for the rights to make and sell Coke products abroad.
Modi says that that type of litigation typically takes time and could be an overhang issue for the company for over a year.