Jefferies ups Coca-Cola HBC to 'buy'

Jefferies upgraded Coca-Cola HBC to ‘buy’ from ‘hold’ on Friday and lifted the price target to 2,000p from 1,800p, as it said that although there is still no visibility on the endgame for Russia/Ukraine, it has more confidence in the underlying earnings prospects of the business.

The bank noted that with Russia and Ukraine accounting for around 20% of profits, CCH has been hit hardest within European beverages, down 31% since the invasion.

"If we remove Russia/Ukraine and assume that the underlying business can grow mid single digit, we believe the shares are trading on calendar 2023 price-to-earnings 13.8x versus 5-year average multiple 19.3x.

"On our £20 price target this implies shares are on 16.8x. As guidance is reinstated, consensus will firm up, investor confidence should build and the shares should re-rate."

CCH said on Thursday that it was evaluating all options for its Russian operations and would have a smaller presence in the country after US drinks company Coca-Cola suspended operations in response to the invasion of Ukraine.

The bottler said it was still in the process of implementing the decision taken in March by Coca-Cola.