KO
A stock people run to when the market gets jumpy
Coca-Cola was getting a little love Friday morning, up about 1% in premarket trading while futures were doing the cha-cha downward. Translation: when the market starts acting like a toddler who skipped nap time, investors often sprint toward boring-in-a-good-way names like KO.
And boring can be beautiful. Coke is hanging near its 52-week high, which is basically Wall Street’s version of saying, “Yeah, the roller coaster is wild, but I’ll stay on the merry-go-round.” The stock’s technical setup still looks sturdy too, with the shares trading above all the major moving averages.
The not-so-fun part: fairlife got hit
Then there’s the cybersecurity wrinkle. Coca-Cola said its dairy subsidiary, fairlife LLC, detected unauthorized access to parts of its systems, including production-related systems, in a ransomware attack.
A few key takeaways:
- U.S. fairlife production has been temporarily suspended
- Product quality and safety were not affected, according to the company
- Canadian production is still running normally
- Law enforcement and cybersecurity experts are helping with the investigation
That doesn’t scream full-blown disaster, but it is the kind of operational hiccup investors notice. Even for a giant consumer staples name, supply chain drama has a way of showing up on the balance sheet or at least in the headlines.
Earnings are right around the corner
Coke is also set to report second-quarter earnings on July 28. Wall Street is looking for earnings of 93 cents a share on $13.15 billion in revenue, which would be a nice little step up from last year.
Analysts still seem to like the story, with UBS, Citi, and Bank of America all recently lifting price targets. That said, KO is trading at a premium valuation, so the bar isn’t exactly lying on the floor.
Big picture
KO is doing what KO usually does: acting like the adult in the room when growth stocks are busy tripping over their own shoelaces. But the fairlife ransomware news is a reminder that even defensive names can get smacked by very non-defensive problems. If you own the stock, you’re watching earnings for the numbers — and fairlife for the operational cleanup.