Coca-Cola Enterprises Gets a Sell Rating from Susquehanna

By Carrie Williams

In a report released today, Pablo Zuanic from Susquehanna assigned a Sell rating to Coca-Cola Enterprises (NYSE: CCE), with a price target of $33. The company’s shares closed on Friday at $39.50.

Zuanic wrote:

“We do not think consensus estimates properly reflect the challenges ahead for CCE (UK sugar tax, lingering elasticity impact in the UK from FX-related inflation, higher input costs, slower tourism overall, and further regulatory risk), and believe these issues may partly offset net synergy realization (we estimate so far about 75% of these have flowed thru to the bottom line) and slow the move to smaller RTDs (economics). We should also remember that all this is taking place in the context of matured markets (Coca-Cola trademark volumes fell in 2016 and 9M17, and total volumes only grew 0.5%). Most of the buy and sell-side focus has been on synergy realization (from the merger with the Iberia and German bottlers), but we think issues actually signaled by management in the recent 3Q call (credit to them) will weigh on the stock (guidance for 2018 will be issued in February). We are particularly concerned about the UK (more than 20% of earnings) where a low/mid-teens price increase (to the consumer) will come on top of recent price hikes triggered by the weaker GBP since late 2016. Our 2018 EPS is 9% below consensus (we project UK volumes -8% for 2017 but this could be worse based on precedent). We also do not think CCE should trade far above other Coke bottlers (it does now). Our Dec’ 18 price target is now $33.”

According to TipRanks.com, Zuanic is a 3-star analyst with an average return of 2.1% and a 54.5% success rate. Zuanic covers the Consumer Goods sector, focusing on stocks such as Constellation Brands Inc, Anheuser-Busch Inbev Sa, and Craft Brewers Alliance.

Coca-Cola Enterprises has an analyst consensus of Hold, with a price target consensus of $41.33.

Based on Coca-Cola Enterprises’ latest earnings report for the quarter ending September 30, the company posted quarterly revenue of $3.48 billion and quarterly net profit of $357 million. In comparison, last year the company earned revenue of $3.33 billion and had a net profit of $365 million.

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Coca-Cola European Partners Plc is a consumer packaged goods company. It produces, distributes and markets nonalcoholic ready-to-drink beverages. The company serves across Western Europe, including Andorra, Belgium, France, Germany, Great Britain, Luxembourg, Monaco, the Netherlands, Norway, Portugal, Spain and Sweden.