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Coca-Cola To Shut Down Odwalla Smoothie Business, Cut 300 Jobs
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Coca-Cola To Shut Down Odwalla Smoothie Business, Cut 300 Jobs

Coca-Cola Co. (KO) has decided to shut down the production of its cold-pressed juice and smoothie brand Odwalla as the world’s largest beverage maker seeks to shift to more cost-effective products.

The Atlanta-based beverage maker, which bought Odwalla in 2001, said that 300 jobs will be cut as a result of the discontinuation of the operations.

The decision, which was first reported by The Wall Street Journal, comes as food and beverage companies like Coca-Cola are streamlining their operations to meet growing demand for home supplies, while shifting their focus to e-commerce during the coronavirus pandemic.

“This decision was not made lightly and comes at a time when it is more important than ever to evaluate where we can improve efficiencies in our business and operations,” the company said in a statement.

Coca-Cola is grappling with a decline in global volumes due to the impact of the pandemic. The beverage maker warned earlier this year that social distancing mandates along with stay-at-home orders will have a “material impact” on its second-quarter results. The company is scheduled to release second-quarter earnings on July 21.

Shares advanced less than 1% to $44.82 at the close on Wednesday.

CFRA analyst Garrett Nelson last month maintained a Buy rating on the stock with a $55 price target saying that Coca-Cola is “highly attractive” at current levels given its low-beta and more defensive nature.

“We note KO’s attractive international footprint, particularly in faster-growing emerging markets, and its ability to generate strong free cash flows and return cash to shareholders,” Nelson wrote in a note to investors. “We see strong emerging growth and new products including Coke Energy and its new AHA caffeinated flavored sparkling water beverage (introduced in March 2020) helping support KO’s top line and prevent it from falling further.”

With shares still trading down 19% this year, analysts have a cautiously optimistic Moderate Buy consensus outlook on the stock. Out of 9 recent rating reviews, 6 are Buys and 3 are Holds. The $52 average price target implies 16% upside potential in the shares over the coming year. (See Coca-Cola stock analysis on TipRanks)

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