On Thursday, Citi reaffirmed its Neutral rating on Coca-Cola (NYSE:) HBC AG (CCH:LN) (OTC: CCHGY) shares with a consistent price target of £27.50. The firm anticipates that Coca-Cola HBC’s third-quarter results will be robust, bolstered by the company’s varied geographic presence which likely shielded it from the adverse weather conditions that affected many European markets in September.
Coca-Cola HBC’s operations in emerging markets are expected to show strong growth, particularly due to favorable weather conditions boosting trade in Russia, while Nigeria’s performance remains solid. Citi has slightly increased its full-year 2024 estimates for the group’s organic sales growth (OSG) and organic earnings before interest and taxes (EBIT) to 11.3% and 10.7%, respectively.
The revision of the financial forecasts also includes a minor reduction to the earnings per share (EPS) for fiscal years 2024 and 2025, following adjustments for foreign exchange market movements. Despite a recent pullback in Coca-Cola HBC’s stock price, Citi suggests that the anticipated positive third-quarter results could lead to some upside ahead of the official report.
However, given that the company’s share buyback program is currently on hold during the closed period, and considering the stock’s valuation excluding Russia is at a premium compared to the beer sector and aligns with Citi’s preferred soft drinks company, Coca-Cola European Partners (NASDAQ:), the firm does not foresee significant outperformance. Citi’s preference remains with ABInBev, as indicated in their analysis.
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