Coca-Cola's Stock Falls After Analyst Downgrade, Price Target Cut

By Tomi Kilgore Markets MarketWatch Pulse

Shares of Coca-Cola Co. fell slipped 0.6% in premarket trade, after the beverage giant was downgraded at Wells Fargo, which cited concerns over investor rotation out of consumer staples stocks and a challenging macro environment in emerging markets. Analyst Bonnie Herzog cut her rating to market perform, after being at outperform since she started covering the stock three years ago. She cut her stock valuation range to $42 to $44, which is 1.7% to 6.6% above Wednesday's closing price of $41.29, from a range of $49 to $51. Herzog said she believes Coke faces cuts to earnings expectations over the next couple quarters, given relative weakness in emerging market economies and a further strengthening of the U.S. dollar. In addition, "we don't believe [Coke] will remain immune to the staples rotation underway," Herzog wrote in a note to clients. Since the election, the SPDR Consumer Staples Select Sector ETF has lost 0.5%, while the SPDR Consumer Discretionary Select Sector ETF has rallied 6.5%. Coke shares have shed 3.7% since Nov. 8 while the Dow Jones Industrial Average has climbed 8%.

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