BofA Maintains Buy Rating on Coca-Cola Despite Volume Pressures

BofA maintains a bullish stance on Coca-Cola (KO) despite volume pressures, citing solid fundamentals and the potential for improved performance in the third quarter. The company's Q2 2025 results were steady, with organic revenue growth guidance of 5% to 6% for the year. BofA raised its price target from $77 to $78 and maintained its Buy rating.

Bank of America (BofA) has reiterated its bullish stance on Coca-Cola (KO), maintaining a Buy rating and raising its price target despite recent volume pressures. The analyst highlighted the company's solid fundamentals and the potential for improved performance in the third quarter.

Coca-Cola reported its Q2 2025 results on July 22, with the company's organic revenue growth guidance for the full year remaining at 5% to 6%. However, the adjusted EPS outlook was narrowed to around 3%, tightening from the earlier 2% to 3% range. Despite the earnings beat, the stock underperformed on the release day due to weaker-than-expected unit case volumes and broader market pressure. BofA acknowledged these short-term challenges but noted that volume comparisons will ease in the third quarter, which could help improve performance sequentially.

The analyst pointed to Coca-Cola's over five decades of uninterrupted dividend growth and a well-established global brand as key factors supporting its investment thesis. The company, known for its soft-drink brand, also manufactures, markets, and distributes a wide range of beverages, including carbonated soft drinks, non-alcoholic beverage concentrates and syrups, as well as alcoholic beverages.

Coca-Cola's diverse product range positions it well in the evolving beverage market. The company's solid dividend yield of approximately 3.0% provides a reliable income stream for investors. However, investors should be aware of the company's relatively high debt-to-equity ratio of 1.49 and its dividend payout ratio of 72.34%, which may limit the company's ability to reinvest profits into growth opportunities.

Analysts have a consensus rating of "Buy" for Coca-Cola, with an average price target of $77.21. The highest price target for KO is $84.00, while the lowest price target is $70.00. The average price target represents a forecasted upside of 11.11% from the current price of $69.49.

Despite the mixed ratings, BofA maintains its optimistic outlook on Coca-Cola, citing the company's strong fundamentals and the potential for improved performance in the third quarter. The analyst's updated price target of $78 reflects better-than-expected Q2 2025 earnings per share.

References:

[1] https://finance.yahoo.com/news/bofa-stays-bullish-coca-cola-040007071.html
[2] https://www.marketbeat.com/stocks/NYSE/KO/forecast/
[3] https://finance.yahoo.com/news/coca-cola-europacific-partners-first-134201073.html