Coca-Cola HBC rallies on Citigroup upgrade

Beverage bottler Coca-Cola HBC shares jumped on Friday after Citigroup upgraded the stock to ‘buy’.

Analysts at Citigroup said the company’s shares trade at a five-year peak discount to peers.

While they acknowledged concerns – including a potential naira devaluation and rising sugar prices –the analysts felt "these concerns are priced in, providing a good opportunity to buy into improving fundamentals”.

Citigroup expects a visible margin recovery opportunity to be a key driver of share performance.

The broker predicts margins will be subdued this year before accelerating in 2017-18 by 40 basis points, driven by further cost savings and enough price/mix to offset input cost headwinds.

“This should result in a compelling 9% earnings before interest and tax growth,” Citigroup said.

Shares rose 5.21% to 1,353p at 1245 BST.