Coca-Cola’s $97.16 Target Signals Nearly 10% Upside

Coca-Cola shares closed at $88.61 on September 22, after 24/7 Wall St. set a 12-month price target of $97.16. That implies about 9.6% upside from the closing price, before dividends.

The target is the publisher’s own estimate, not a company forecast or Wall Street consensus. Its analysis cited a $87.94 reference price and rated the stock a buy, while noting that much of its recent advance had already happened.

Coca-Cola’s latest results offer support for the bullish view. The company reported second-quarter comparable earnings of 97 cents per share, up 11% from a year earlier, while net revenue rose 7% to $13.38 billion.

Global unit case volume, a measure of beverages sold, increased 5%. Coca-Cola Zero Sugar volume rose 16%, and the company said it gained value share in total nonalcoholic drinks.

Management raised its full-year comparable earnings growth forecast to 9% to 10%, from 8% to 9%. The company also expects about 5% organic revenue growth, which excludes the effects of currency moves and acquisitions.

Currency is an important part of that earnings outlook: Coca-Cola’s guidance includes an estimated 3% benefit from exchange rates. Investors will need to distinguish that boost from growth generated by sales and operations.

The dividend adds to the potential return. Coca-Cola raised its quarterly payment to 53 cents per share in February, its 64th consecutive annual increase. At the September 22 close, that annualized $2.12 payout equaled a yield of about 2.4%.

Warren Buffett’s Berkshire Hathaway began buying Coca-Cola shares in 1988 and has kept the company among its long-term holdings. The case for more gains now depends on Coke sustaining sales growth and margins while converting its higher earnings forecast into results.