Following a rating upgrade by Morgan Stanley, Coca-Cola stock price jumped more than +2% in pre-market trading Tuesday.
Morgan Stanley analysts raised rating on the soft drink giant’s shares to overweight from equal weight. Analyst Dara Mohsenian also hiked her 12-month price target on the stock to $55 from $52, which reflects a 14.5% upside.
Mohsenian emphasized that growth outlook on Coca-Cola is higher than its consumer packaged goods peers, while also praising the company’s pricing power, “strategy tweaks”, strong volume growth, and rebounding emerging market trends as tailwinds for the stock. According to the analyst, these factors are not yet fully captured in Coca-Cola’s current relative valuation in the market – thereby hinting at a potentially attractive valuation.
Mohsenian revised her earnings-per-share estimates for Coke to 42 cents from 41 for 2019, and to 46 cents from 44 for 2020.
Coca-Cola is now Morgan Stanley’s “top mega-cap staples pick”, as mentioned by Mohsenian in her note to clients.