NEW YORK (TheStreet) -- Coca-Cola (KO) shares are down 0.78% to $40.26 in trading on Tuesday after the global beverage maker had its price target lowered to $40 from $42 by analysts at Jefferies before the opening bell today.
The firm maintained its "hold" rating on the company's stock despite the downgraded outlook.
The decreased price target comes following the company's after-hours announcement yesterday that it expects to see 2015 earnings growth in line with this year's growth but short of its previous expectations. The company expects to see earnings per share growth between 4%-5% in 2015; it had previously said that it expects to see growth in the high single digits.
"While fundamentals remain pressured & w/FX now more onerous, KO still expects c. 4%-5% FX neutral EPS growth in FY15.Though, we think Street FY15 EPS est. are likely to come down by c. 4% on FX, valuation remains expensive at 20.2x CY15e P/E, and we see little in the way of catalysts to get the stock moving higher," said analysts at Jefferies.
TheStreet Ratings team rates COCA-COLA CO as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate COCA-COLA CO (KO) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins, reasonable valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for COCA-COLA CO is rather high; currently it is at 65.60%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.65% is above that of the industry average.
- COCA-COLA CO's earnings per share declined by 11.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, COCA-COLA CO reported lower earnings of $1.90 versus $1.96 in the prior year. This year, the market expects an improvement in earnings ($2.05 versus $1.90).
- KO, with its decline in revenue, slightly underperformed the industry average of 0.6%. Since the same quarter one year prior, revenues slightly dropped by 0.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Beverages industry and the overall market, COCA-COLA CO's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- You can view the full analysis from the report here: KO Ratings Report