Fly Intel: What to watch in Coca-Cola earnings report

Coca-Cola (KO) is scheduled to report results of its fiscal second quarter before the market open on Tuesday, July 23, with a conference call scheduled for 8:30 am ET. What to watch for: 1. GUIDANCE: When Coca-Cola reported first quarter results on April 23, it gave Q2 and fiscal year 2019 guidance. The company said it saw a 6% tailwind from acquisitions, divestitures and structural items for Q2 comparable net revenues, and a 4%-5% currency headwind based on the current rates and including the impact of hedged positions. For FY19, it saw EPS growth of (1%)-1% versus $2.08 in 2018 in comparable EPS from continuing operations, with approximately 4% growth in organic revenues, and 12%-13% growth in comparable currency neutral net revenues, including an 8%-9% tailwind from acquisitions, divestitures and structural items. 2. MORGAN STANLEY BULLISH: Morgan Stanley analyst Dara Mohsenian upgraded Coca-Cola to Overweight from Equal Weight on May 14, and raised his price target for the shares to $55 from $52. The company's growth outlook is "clearly superior" relative to the packaged goods space, but this is not reflected in the current share price, Mohsenian told investors at that time. Coca-Cola's valuation discount is "unfair" as it offers structurally higher sales growth compared to peers, added the analyst. Mohsenian attributes the company's below-consensus 2019 guidance to currency and feels it should have a minimal impact on Coca-Cola's valuation. 3. MONSTER ENERGY: Coca-Cola, which holds a stake in Monster Energy (MNST), has been developing new energy drinks that it plans to market with its own brands, and it delayed the launch of its energy products until its resolved its dispute with Monster, which went to arbitration late last year. A decision was reached by the arbitration panel in late June, and they ruled that the introduction and sale of Coca-Cola Energy is allowed under the terms of a contract between the companies, as Coca-Cola Energy products fall within an exception to a non-compete provision relating to beverages marketed or positioned under the Coca-Cola brand. 4. OTHER STAKES, PARTNERSHIPS: On May 20, Coca-Cola announced it would maintain its majority stake in Coca-Cola Beverages Africa for the foreseeable future. On June 25, American Dream announced a 10-year partnership with Coca-Cola Company and its local bottling partner, Liberty Coca-Cola Beverages. American Dream is scheduled to open in Fall 2019 in New Jersey, and it will include more than 450 retail, food and specialty shops, along with more than 15 entertainment offerings. The complex will be three million square feet and projects 40M visitors annually.