Shares of soft drinks giant Coca-Cola Co. (KO) have performed well over the past few months as the company is benefitting from the reopening of major markets.
However, the stock dropped to a low of $55.20 in U.S. trading on Tuesday before recovering slightly to close at $55.41.
What Led to the Sudden Slide in the KO price?
Ahead of their Euro 2020 opener, football superstar Cristiano Ronaldo addressed reporters at Portugal’s pre-match press conference. Being a health fanatic, Ronaldo snubbed the Coca-Cola bottles placed in front of him, preferring water instead.
With Cristiano Ronaldo being a global superstar and one of the most influential figures on social media, any action by him is likely to have strong implications.
Therefore, Ronaldo’s disapproval of the drink led to a decline in the company’s share price in a matter of minutes, wiping out an estimated $4 billion of the brand’s value. The stock did, however, manage to recover slightly in late trading. (See KO stock chart on TipRanks)
Though the company has been losing market share globally in the ready-to-drink market due to the onset of the COVID-19 pandemic, things have recently started to change.
The company has benefitted from the reopening of restaurants and movie theatres in key markets of the U.S. and Europe. This can be seen in the company’s stock price, which has climbed nearly 15% since the start of February.
However, Ronaldo’s condemnation for the unhealthy drink might have left a mark on the minds of youngsters, especially football lovers, be it young or old.
On June 15, Credit Suisse analyst Kaumil Gajrawala reiterated a Buy rating on the stock and increased the price target to $62.00 from $60.00. This implies 11.9% upside potential to current levels.
The analyst remains positive about the company going forward. He believes the recovery “should be earlier and faster than planned,” due to increasing vaccination rates. The analyst expects the company’s estimates to remain above consensus levels.
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 7 Buys and 4 Holds. The KO average analyst price target of $60.20 implies 8.6% upside potential from current levels.
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in KO is currently Neutral, as the cumulative change in holdings across all 18 hedge funds that were active in the last quarter was an increase of 653,700 shares.
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