Coca-Cola Co received a bullish update from Barclays, which raised its price target to $98 while maintaining an Overweight rating on the stock. This revision represents a $5 increase from the previous target of $93.

Analyst Action

Lauren Lieberman, the analyst at Barclays responsible for the coverage, affirmed the Overweight stance on Coca-Cola. The decision to lift the price target suggests a strengthened outlook for the company's performance relative to prior expectations.

The adjustment highlights Barclays' continued confidence in the beverage maker's strategic positioning and financial trajectory.

Coca-Cola Co will become the new beverage partner for KFC in the United States, ending a nearly 40-year relationship with PepsiCo. The agreement covers all 3,700 KFC restaurants across the country.

The transition begins in January 2027, with Coca-Cola products expected at all U.S. locations by the end of the first quarter. International KFC outlets will continue to serve PepsiCo beverages.

Strategic shifts in the quick-service sector

The switch supports KFC’s “Kentucky Fried Comeback” strategy, aimed at attracting customers and regaining market share from competitors like Chick-fil-A and Popeyes. Catherine Tan-Gillespie, President of KFC U.S., described the partnership as a key step in the chain’s turnaround, highlighting opportunities for new beverages and improved customer experiences.

For PepsiCo, the loss of KFC U.S. is a significant setback amid struggles to revive growth in its North American carbonated soft drink business. During its recent earnings call, PepsiCo lowered its fiscal 2026 earnings outlook due to margin pressure in North America and outlined additional cost-cutting measures. Activist investor Elliott Investment Management has also pressured PepsiCo to improve its North American operations.

However, PepsiCo retains strong ties elsewhere. It renewed beverage agreements with Taco Bell for 10 years and secured a similar 10-year deal with Subway in 2024, replacing Coca-Cola at Subway’s U.S. restaurants. PepsiCo also continues to supply KFC international locations.

Coca-Cola strengthens fast-food footprint

For Coca-Cola, this deal reinforces its dominance in the U.S. quick-service restaurant market. The company already supplies major chains including McDonald’s and Wendy’s. Recent partnerships include Culver’s, Arby’s, and Panda Express.

Dagmar Boggs, Coca-Cola’s president of foodservice and on-premise operations in North America, stated that the partnership combines KFC’s food offerings with Coca-Cola’s beverage portfolio and innovation capabilities. Financial terms of the agreement were not disclosed.

Market reaction

Data source: Benzinga Pro