Credit Suisse has upgraded Coca-Cola's shares to 'outperform' from 'neutral', and said the economic downturn will strengthen its long-term earnings potential.

Analyst C Laboy said yesterday (9 March) that the company has strong local operations in key markets outside the US and its earnings visibility is "superior" to most companies in the crisis.

"We also believe that the underlying health of the Coke system will improve through this crisis while other erode," he said.

Laboy gave a new 2009 EPS estimate of US$3.00, which has been trimmed by $0.06 to account for foreign exchange erosion.

Credit Suisse said that it is keeping PepsiCo at "outperform". It expects the group to have a "difficult" first quarter, which it believes has been absorbed by investors.

"As the year unfolds, more than two-thirds of PepsiCo's profits will come from North America where the Frito Lay business is likely to remain resilient," Laboy said.

PepsiCo shares were down 1% at $46.67 in Monday morning trade on the New York Stock Exchange.

Last month, PepsiCo reported a 9% drop in full-year net earnings to US$5.1bn. Profit in the fourth quarter tumbled 43% to $1.2bn. The soft drinks giant blamed the fall on one-off charges related to its restructuring programme, as well as charges incurred by The Pepsi Bottling Group and commodity costs.

Coca-Cola posted a 3% year-on-year fall in net profit for 2008, coming in at US$5.81bn. Total sales for the year were up, however, by 11% on 2007 at $31.94bn.