Coca-Cola (KO) and rival Pepsi (PEP) are the targets of a new lawsuit over plastic pollution in the Virgin Islands. The U.S. territory has filed a lawsuit against the two over their production of single-use plastic bottles without contributing enough to the recycling of the containers.
The lawsuit against Coca-Cola and Pepsi points to a hefty amount of plastic that has the Virgin Islands’ two landfills consistently near or at max capacity. It also argues the two companies don’t use enough recycled plastic when making their bottles, causing additional environmental damage. It cites 2022 reports that placed Coca-Cola’s recycled plastic sourcing rates at less than 14% and Pepsi’s at 6%.
The Virgin Islands lawsuit comes shortly after a European watchdog filed a complaint against Coca-Cola over its recycling claims. To avoid legal trouble, the soda company has agreed to alter the text of its European bottles to better reflect its recycling efforts.
Will This Lawsuit Meaningfully Impact KO or PEP Stock?
It’s unlikely that the plastic pollution lawsuit will have a significant impact on KO or PEP stock. Coca-Cola and Pepsi both deal with issues like this fairly regularly without it significantly draining their resources.
Analysts also aren’t likely to care much about the environmental lawsuit. Instead, the financial performance of the two companies is more important to them. That means investors shouldn’t expect any ratings or price target updates to be triggered by this news.
KO vs. PEP: Which Stock Is the Better Buy?
Turning to Wall Street, Coca-Cola appears to be the better investment with its analyst consensus Strong Buy rating and average $79.38 price target, representing a potential 10.39% upside. For comparison, the analyst consensus rating for Pepsi is Moderate Buy with an average $151.14 price target, representing a possible 13.95% upside.
