Coca-Cola higher after co affirms FY, 2002 earnings outlook

Shares of Coca-Cola Co moved sharply higher in late morning trade after the company affirmed its 2001 and 2002 earnings outlook and said it expects worldwide unit case volumes to grow 4-5% in the fourth quarter, in line with its previous estimates, dealers said.

At 11.29am, shares of Coca-Cola were trading $1.18 higher, or 2.54%, at 47.60. Pepsico Inc stock gained $1.80, or 3.80%, to 49.10.

The DJIA was up 39.36 points at 10,037.77, the S&P 500 rose 5.29 points to 1,148.21, while the Nasdaq composite lost 6.87 points to 1,997.89.

Dealers said that Coca-Cola's earnings confirmation for 2001 and 2002 was sparking buying interest in the company's shares as better-than-consensus volume growth bodes well for its future earnings.

"We are very encouraged that management affirmed its profit outlook for FY2001 and FY2002," said Michael Branca, an analyst at Lehman Brothers.

"Coca-Cola's global volume performance is actually quite venerable and reflects the merits of possessing a truly diversified global portfolio - as better-than-expected volume in Asia and Europe more than offset slower growth in North and Latin America," Branca said.

The analyst is maintaining his full-year 2001 EPS forecast of $1.57, in line with the First Call/Thomson Financial consensus.

For 2002, Branca is raising his global case volume growth estimates to a range of 4.5-5.0% from 4.5.

"This upward revision is driven by our belief that initial post-September 11, volume target cuts erred too far on the side of caution," the analyst said.

Furthermore, Branca is maintaining full-year 2002 earnings per share estimates of $1.79, 2 cents higher than the First Call analysts' consensus.

However, possible negative effects on Coca-Cola's EPS are continued currency pressure, mostly in the yen and the euro, including the Brazilian real and South African rand, as well as a new bottling agreement with Coca-Cola Enterprises Inc, he said.