Coca-Cola shares should continue to climb as the beverage giant takes steps toward insulating its stock from a variety of geopolitical and macroeconomic factors, according to Bank of America. The bank has a buy rating on the beverage name. It also has a $90 price target on shares, implying 10% upside from Wednesday’s close. “We highlight The Coca-Cola Company (KO) as a multi-year global consumer compounder with significant runway as it delivers on its ‘all weather strategy’ to create new beverage occasions and drive hydration globally,” analyst Peter Galbo said Thursday in a note to clients. Coca-Cola has long offered fairly consistent returns, in part due to its strong brand identity, international distribution and predictable cash flow. The stock pays a current dividend yield of 2.6%. The company also lifted its dividend payment for the 64th straight year in February, which enhances returns for long-term shareholders. The stock has gained 49% in the past five years on a price basis, but with dividends reinvested, Coca-Cola has a total return of nearly 73% over the same period. KO 5Y mountain Coca-Cola shares are up 49% over the past five years. Coca-Cola has earned a permanent place in Berkshire Hathaway’s portfolio, with former CEO Warren Buffett calling the beverage name one of his “forever” stocks. A strategy for every season Coca-Cola has been executing on its “all-weather strategy,” doubling down on efforts to generate consistent growth. Under the plan, the firm has aimed to refine its pricing and marketing strategies and strengthen its supply chain. Lately, Coca-Cola has aimed to diversify its product offerings and gain ground against competitors, furthering its “all weather” vision, according to Bank of America. The company has led a shift to zero-sugar carbonated soft drinks, particularly through sales of Coca‑Cola Zero Sugar, Galbo noted, adding that the soda has outperformed all legacy brands. “In our view, companies with diversified portfolios are best positioned to sustain long-term growth,” Galbo wrote. “Against that backdrop, KO holds leading or strengthening positions across three of the four flavor verticals, reflecting years of cumulative brand investment, innovation, and execution…reinforcing our confidence in the durability of KO’s category leadership and its ability to continue compounding growth.” The analyst also pointed to the possibility that Coca-Cola could acquire popular energy drink maker Monster Beverage , which he said could be a catalyst for the stock. Coca-Cola took a nearly 17% stake in Monster back in 2015, valued at $2.15 billion at the time. “Synergies remain meaningful and achievable,” Galbo wrote. “MNST already leverages KO’s global bottling system across about 150 countries, which would allow for further alignment of economics under KO ownership.” Bank of America’s call falls in line with consensus on Wall Street. Of the 26 analysts covering Coca-Cola, 21 have a buy or strong buy rating on the stock, LSEG data shows.
