Morgan Stanley Names Coca Cola Stock Top Beverage Pick Predicting Massive Long Term Organic Sales Growth

Key Stats for Coca-Cola Stock

• Price change for Coca-Cola stock: 3%
• $KO Share Price as of Jun. 11: $84
• 52-Week High: $84
• $KO Stock Price Target: $86

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What Happened?

Coca-Cola (KO) stock touched a new all-time high on Wednesday, rising about 3% as two catalysts hit at once. Morgan Stanley upgraded its view on the stock, and the FIFA World Cup kicks off across North America.

Analyst Dara Mohsenian reiterated his Overweight rating and named Coca-Cola stock his top pick in the beverage sector, with a price target of $89.

That implies roughly 6% upside from today’s price.

The key reason is simple: Mohsenian thinks Coca-Cola can grow organic sales faster than most of its consumer staples peers over the long run.

Two specific things are driving that view.

• First, the Fairlife premium dairy brand is gaining momentum. Morgan Stanley pointed to improving U.S. retail scanner data for Fairlife over recent weeks as additional production capacity comes online.
• The company confirmed on its most recent earnings call that its new Webster, Texas, facility is starting to ramp.
• Second, Coca-Cola has been able to hold prices better than many of its consumer packaged goods rivals, even as inflationary pressures have hit lower-income shoppers.

The World Cup timing adds a near-term boost.

• Coca-Cola is an official beverage sponsor of the tournament, which is being hosted across the U.S., Canada, and Mexico.
• The company rolled out limited-edition country-themed packaging with embedded QR codes that give fans access to digital content and promotions.
• CFO John Murphy described North America as “arguably the most attractive consumer base we have, given their propensity to consume and the cumulative purchasing power that exists there.”

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What the Market Is Telling Us About Coca-Cola Stock

Coca-Cola stock trading at an all-time high tells you a lot. This is a $350 billion company that just hit a fresh peak in a week when most of the market was selling off. That kind of defensive outperformance is exactly what investors look for when macro conditions get choppy.

The latest quarterly results backed up the bullish story.

• Volume grew 3% in the first quarter across all segments.
• The company raised its full-year earnings guidance to 8%-9% growth.
• While gross margins dipped slightly on coffee and tea cost pressures, operating margins actually expanded.

The bear case is also honest. Most of the world’s economies are still under pressure, particularly those of lower-income consumers. The Middle East conflict affected March volumes in that region. And at $84, Coca-Cola stock is no longer cheap, trading at roughly 26 times earnings.

But for investors looking for steady growth, reliable dividends, and a World Cup tailwind through July, it’s easy to see why Morgan Stanley likes it here.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!