Oct 23, 2023

Coca-Cola shares have dropped over 6% in the last month and will look for a boost from Q3 earnings on Tuesday.


KO: Weekly Chart

KO shares are trading at $54.57 after bouncing at support from late 2021 at $52.45. Like Pepsico, there is talk that Coca-Cola is suffering due to the craze for weight-loss drugs like Ozempic and Wegovy. The medication, which works as an appetite suppressant, is said to be hurting the demand for food and beverage companies. There was no sign of a real problem in Pepsico’s earnings, and Coca-Cola’s will likely be the same. Coke sales beat estimates for the 10th straight quarter in its second-quarter earnings. Analysts’ forecasts for Coca-Cola range from $60 to $75, with the average estimate being 32% ahead. The company’s third-quarter earnings are expected to have gained from revenue growth across each operating segment, helped by an improved price and mix of its products and higher concentrate sales.

However, there are headwinds from higher supply-chain costs, such as higher commodity input costs and deliveries. Input costs have also been a drag due to higher inflation, and that could hurt the company in the short term. Inflation has started to cool, which may lead to better performance over the next year, and the company trades at around 24x earnings, which is near the higher end of its recent average over the last ten years. Coke could be a good value buy for longer-term investors, but any negatives in the coming earnings on Tuesday could see another test of the 2021 support.

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