EUROPE: Coca-Cola Enterprises has "growth levers" despite Europe exposure - analyst
CCE has the ability to grow despite its European exposure, analysts say
Coca-Cola Enterprises (CCE) should be a “solid long-term growth story” despite its large footprint in the stagnant markets of Europe, according to an analyst.
In a note released today (12 October), CLSA said it sees several “growth levers” for the Coca-Cola bottler. These include sustainable per-capita consumption gains, margin expansion and the ability to execute acquisitions and/or greater share repurchases.
The group also has the option to buy Coca-Cola Co’s bottling in Germany until May 2013, the analysts noted. “We expect either a favourable deal for CCE or an announcement of large-scale share repurchases,” the note said.
CLSA also raised its estimates to “reflect better currency”. “Our 2012 EPS is now US$2.25 (was $2.20) and our 2013 EPS is now $2.67 (was $2.50),” it added.
“We raise our target to $36 from $33, but lower our rating to O-PF from buy as we now expect more moderate 15% total return.”
CCE's net profits slid by 10.8% to US$314m in H1 this year due to "unfavourable weather and ongoing marketplace challenges" in Q2.
The company will release its Q3 results on 22 October.
The concentrates market remains in rude health, with both developed and emerging markets for soft drinks offering great rewards. Here, Jonas Feliciano from Euromonitor takes a closer look at the categ...
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