Como se combate o populismo? "Com eleições", responde Fukuyama

[Jameson]

THE RATINGS GAME

Coca-Cola upgraded to buy at UBS
Benefits seen accruing from marketing, better execution

By Michael Baron, MarketWatch
Last Update: 8:43 AM ET Aug. 19, 2005

NEW YORK (MarketWatch) -- Shares of Coca-Cola Co. gained early Friday after UBS raised its rating to buy, saying that it believes heavy marketing efforts and better execution should pay off for the soft-drinks giant and that such a "turnaround" is happening now.

The brokerage thinks the company is poised for acceleration in sales growth that should set the stage for a multiple expansion similar to what the stock experienced in 1994, the last time Coca-Cola traded at a similar valuation level.

In pre-market action, shares of the Dow Jones Industrial Average component (KO: news, chart, profile) added 97 cents, or 2.2%, to $44.50 on Instinet volume of 9,100.

"We believe investors are under-appreciating the impact of KO's implementation of $400 million worth of incremental marketing/innovation, which is almost entirely back-half loaded (even though it has shown up in 1H on GAAP financials)," a UBS research note said.

"Moreover, we believe a stronger bottling network is freeing up funding for KO to increase brand marketing over promotional funding," UBS told clients.

UBS also lifted its price target on the stock to $53 from $46, a valuation that's roughly 22 times the firm's earnings estimate for fiscal 2006.

Easy comparisons on the basis of volume and profit with 2004 should also help the stock, according to UBS, which added that it expects the appointment of Mary Minnick to assume the president of innovation position should help as well.

UBS also expects improvement in macroeconomic conditions in areas like Mexico and the United Kingdom, in turn working to Coca-Cola's benefit.

Coca-Cola shares closed Thursday at $43.53, not all that far from its 52-week high of $45.88 set last September