Coca-Cola Europacific Partners' Strong H1 Performance and Analyst Momentum Signal a Buy Opportunity

Coca-Cola Europacific Partners (CCEP.L) has emerged as a standout performer in the stabilizing consumer staples sector, with its first-half 2025 results underscoring a compelling alignment of earnings resilience, strategic execution, and external validation from analysts and credit rating agencies. For investors seeking a long-term growth and income play, the company's financial strength, coupled with upgraded price targets and a positive credit outlook, presents a rare confluence of catalysts.

Earnings Resilience: A Foundation for Confidence

CCEP's H1 2025 results were a masterclass in navigating macroeconomic headwinds. Reported revenue rose 4.5% to €10.27 billion, with adjusted comparable growth of 2.5%, driven by disciplined pricing, promotional optimization, and a favorable product mix. Revenue per unit case (UC) climbed 3.8%, with Europe posting a 4.2% increase—bolstered by price hikes in France, Iberia, and the UK—and the Australia-Pacific-Southeast Asia (APS) region contributing 3.2% growth, largely from Australia.

Operating profit surged 19.4% to €1.36 billion on a reported basis and 7.2% to €1.39 billion on an adjusted comparable basis, reflecting the company's ability to absorb cost pressures. Despite a 3.6% rise in cost of sales per UC due to higher concentrate costs and tax increases, CCEP's operating margin expanded to 13.3%, a testament to its operational efficiency. The company reaffirmed its full-year guidance of 3–4% revenue growth and 7% operating profit growth, signaling confidence in its ability to sustain momentum.

Analyst Upgrades: A Vote of Confidence

The market's skepticism about consumer staples in a high-interest-rate environment has been tempered by CCEP's execution. UBS upgraded its price target for CCEP.L from $96 to $100, maintaining a “Buy” rating. The firm cited the company's outperformance relative to peers, its disciplined margin management, and the potential for further upside from its share buyback program.

Meanwhile, Moody's revised its credit outlook for CCEP to “Positive” from “Stable,” affirming its Baa1 rating. The agency highlighted the company's strong cash flow generation, robust balance sheet, and strategic focus on sustainability and innovation. This upgrade not only reduces refinancing risks but also signals to institutional investors that CCEP is well-positioned to withstand sector-specific volatility.

Strategic Alignment: A Buy Opportunity for Income and Growth

CCEP's strategic alignment between earnings strength and external validation creates a compelling case for investors. The company's interim dividend of €0.79 per share—40% of the FY2024 payout—combined with a €1 billion share buyback program (€460 million completed by mid-July 2025), underscores its commitment to shareholder returns. With a free cash flow of €425 million in H1 2025 and a full-year target of at least €1.7 billion, CCEP has the financial flexibility to reward investors while funding innovation in high-growth categories like Coca-Cola Zero Sugar and Monster Energy.

The company's geographic diversification further enhances its appeal. While Indonesia's weak consumer environment dented APS volumes, Europe's resilient Away from Home (AFH) channel—up 1.1% in H1—and Australia's strong home consumption (5.0% volume growth) demonstrate CCEP's ability to balance regional challenges with opportunities.

The Case for a Long-Term Position

For income-focused investors, CCEP's yield and buyback program offer a dual tailwind. For growth-oriented investors, its innovation pipeline—such as the Q1 launch of Fanta Lemon in Australia and the return of “Share A Coke” campaigns—positions it to capture market share in premium and functional beverage categories. Moody's positive credit outlook and UBS's upgraded price target add a layer of credibility, reducing downside risk in a sector where margins are under pressure.

In a stabilizing consumer staples landscape, CCEP.L is not just surviving—it's thriving. The company's ability to balance pricing power with cost discipline, coupled with its strategic reinvestment in technology and AI, suggests that its best days are ahead. For those willing to look beyond short-term volatility, CCEP represents a rare combination of defensive qualities and offensive potential.

Investment Recommendation: Buy CCEP.L for a long-term position, with a focus on its durable cash flow, dividend yield, and strategic momentum. Investors should monitor regional volume trends in Southeast Asia and the impact of FX headwinds, but the company's resilience and external validation make it a compelling addition to a diversified portfolio.