Overview
JPMorgan has reclassified Coca-Cola FEMSA (NYSE: KOF) from Overweight to Neutral and established a price target of $100.00. The move follows the bank's assessment that the company's consolidated growth will be modest over the next two years. At the time of the note, the stock was trading at $108.58, above JPMorgan's new target but described as undervalued by InvestingPro Fair Value metrics.
2026 financial outlook and operating assumptions
JPMorgan's 2026 forecast calls for consolidated revenue growth of 5% year-over-year and EBITDA growth of 6%, alongside a 20 basis point expansion in operating margins. The bank expects a 3% year-over-year decline in beverage volumes in Mexico for 2026, a drop it attributes to the full pass-through to consumers of a recent excise tax increase on flavored drinks. Even with the volume pressure, Mexico and Central America revenues are still projected to post 1.9% growth for 2026.
JPMorgan also notes that South America will remain an important contributor to consolidated results, with most markets in that region expected to show high single-digit growth in peso terms across both 2026 and 2027. However, the firm has trimmed its EBITDA estimates for 2026 slightly, citing slower growth momentum in South America.
2027 recovery assumptions
Looking to 2027, JPMorgan models a recovery in Mexican volumes, forecasting a 6.5% year-over-year increase that would bring volumes back to levels seen in 2024. The bank expects market share gains in Mexico and Central America to support a 12% revenue increase in that region in 2027, which helps underpin the projected improvement in consolidated results.
Market performance and financial health
Despite the downgrades from major brokers, Coca-Cola FEMSA has shown notable share-price momentum, delivering a 33% total return over the past six months. InvestingPro analysis attributes a "GREAT" financial health score to the company, a characterization referenced alongside the broker notes.
Other analyst action
Barclays has also moved to a more cautious stance, reducing its rating on Coca-Cola FEMSA from Overweight to Equalweight and setting a $98.00 price target. Barclays cited limited near-term upside potential but acknowledged the company’s geographic diversification and disciplined hedging strategies as ongoing supports for earnings strength.
Implications for investors
The broker revisions and the forecasts they contain offer a tempered view of near-term upside for Coca-Cola FEMSA. Market participants assessing the stock will want to weigh JPMorgan’s volume and margin assumptions for 2026 and the anticipated rebound in 2027 against the stock’s recent price performance and InvestingPro’s valuation and health metrics.