Coca-Cola Company (NYSE:KO) will roll out a cane sugar–based Coke in the U.S. later this year and expects subsidiary Fairlife's capacity ramp to boost North American volumes and cash flow in 2026.
BofA Securities analyst Peter T. Galbo reiterated the Buy rating on Coca Cola, raising the price forecast from $77 to $78.
On Tuesday, the food and beverage giant reported second-quarter adjusted earnings of 87 cents per share, beating the consensus of 83 cents.
Net revenues grew 1% to $12.50 billion, almost in line with the consensus of $12.54 billion, and organic revenues grew 5%.
Galbo noted Coca‑Cola's second‑quarter earnings per share topped both his and the Visible Alpha consensus forecasts, leading the company to tighten its comparable EPS growth outlook to 3% year‑over‑year.
He adds that the stock lagged amid elevated expectations, weaker-than-anticipated unit case volumes and a broader market pullback, but that Coca‑Cola's strong margin performance in the first half and easier consumption comparisons into the third quarter should support relative outperformance through the rest of Staples earnings season.
After the beat, the analyst raises his full‑year 2025 EPS estimate to $2.97 (from $2.95).
Galbo forecasts third quarter earnings per share of 77 cents driven by 4.3% organic sales growth with volume outpacing concentrates by ~100 bps; gross margins expanding 40 bps to 61.6%; operating margins rising 80 bps to 31.5%; and a new cane sugar–based Coke slated for U.S. launch later this year.
Galbo notes that in 2026, the ramp‑up of Fairlife's new capacity should boost North America volumes and mix.
Past cash‑flow headwinds from the Fairlife contingency payment and transition taxes are set to reverse into tailwinds. This shift will improve liquidity and pave the way for excess cash returns, the analyst writes.
KO Price Action: Coca-Cola shares were trading lower at market close Wednesday by 0.67% to $69.16.
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