Citi expects upgrades at Coca-Cola HBC, but stays at 'neutral'

Citi has reiterated a 'neutral' rating on Coca-Cola HBC, predicting that the stock will "pause for breath" ahead of its first-half results next month.

The bank said it expects the soft drinks bottling firm to meet consensus forecasts with second-quarter volumes, with organic sales predicted to grow by 9.4% when it reports its interim results on 7 August.

Meanwhile, a "solid first-half profit delivery" should allow the company to upgrade its full-year organic growth metrics and guidance for organic EBIT growth to the 9-12% range, up from the 3-9% range guided to in April.

"However, given: 1) the recent solid share price performance; 2) greater opportunity for Q3 earnings upgrades at other European beverage stocks, e.g. CCEP, Heineken; 3) share buyback support now absent ahead of the print; and 4) the stock trading on a full but fair ex: Russia PE of 18.0x, we expect the shares to pause for breath," said analyst Simon Hales.

The shares were up 1% at 2,708p by 1108 BST, having risen 17% over the year to date.