Coca-Cola HBC AG (LON:CCH) is under the cosh after JP Morgan Cazenove downgraded the stock to ‘neutral’ from ‘overweight’ and cut the target price to 2,600p from 2,800p.
JP Morgan said it believes the company is on a “strong fundamental growth trajectory” and is best placed to acquire a stake in bottler Coca-Cola Beverages Africa (CCBA).
Coca-Cola Co. (NYSE:KO) is to sell its 54.5% holding in the African business in 2018, which JP Morgan believes implies a announcement in the next six months.
However, the broker expects accretion from a deal for CCH would be lower than previously anticipated given the "potential recent deterioration" of profitability at CCBA. Accretion from CCBA for CCH would be closer to 10%, rather than the 30% initially expected, it said.
“We would therefore take profit and await a better entry point post the CCBA announcement,” JP Morgan said.
Shares fell 4.80% to 2,461p in morning trading.