Not only did Coca-Cola (KO - Get Report) management give Morgan Stanley analysts a positive take-away after their meeting, but the stock could perform better than many would expect.

That doesn't come without risks, but America's favorite soft-drink maker is doing three things notably well at present, according to a note out Tuesday morning from Morgan Stanley analyst Dara Mohsenian.

Smaller Packages for... Higher Prices?

There's a health trend affecting food and drink companies globally right now. Sure, Coca-Cola and Pepsi (PEP - Get Report) want to get into other businesses that aren't unhealthy, but if most of their revenue streams come from soda, they'll want to do something to address the health trend.

Coca-Cola is focusing on smaller cans and packages, which Pepsi said on its last earnings call it also was doing. And analysts don't think that comes at the expense of higher prices. In fact, quite the opposite is true. Coca-Cola is "focused on driving packaging mix with smaller and higher priced packages," Mohsenian said.

Management Is Executing

A good strategy matters only if management can execute.

"Top-line growth" will be "supported" by "execution, with Coke citing improved execution over the last couple of years, and better alignment with its bottler partners," said Mohsenian.

The bank says strong execution of the pricing and product strategy keeps the company on track to hit its 5% sales-growth goals for the next few years, which is in line with the rest of Wall Street's estimates, according to FactSet.

Margin Expansion

It's in the consensus estimates for Coca-Cola to expand its operating margin. Analysts are looking for the margin to be 28% in 2019, 29% in 2020 and 30% in 2021. That would be driven largely by more sales weighting to higher priced products, while costs grow at a slower clip than prices do.

Importantly, "KO sounded confident in its ability to expand margins post 2019," Mohsenian said.

With the revenue growth and operating-margin expectations where they are, Coke trades at 24 times 2020 earnings estimates. That compares to Pepsi's multiple of 22, but Pepsi's operating margins are slimmer than Coke's, with revenue-growth expectations roughly the same.

Morgan Stanley says Coke should trade at 26 times its 2020 earnings estimate, bringing its price target to $60. That represents about 9% upside.

And if stocks more broadly continue to fall with worsening trade relations and broader macroeconomic concerns, Coca-Cola could be better than your garden-variety defensive stock pick with a nice 2.9% dividend yield.

Risks

Morgan Stanley could be wrong. And 9% upside isn't anything off the charts. If the stock sees only modest gains, which it does most years, it would be back at your average staples pick while cyclicals fall ahead of a potential recession.

Currency fluctuations are expected to add a few dollars and cents to costs, and if those fluctuations are more pronounced on the downside in the coming one or two years, that would put a dent in much of the bull thesis on Coke.

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