Coca-Cola Amatil Ltd shares slide 6% on broker downgrade

The Coca-Cola Amatil Ltd (ASX:CCL) share price is down 6% in morning trade following a broker downgrade. Here's what you need to know…

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Unfortunately for its shareholders, the Coca-Cola Amatil Ltd (ASX: CCL) share price has fallen sharply for a second day in a row.

With its shares down 6% to $8.37 in early trade, the beverage company's shares have now tumbled 9% this week.

Why are its shares down?

As we mentioned yesterday, Coca-Cola Amatil has been dumped as a supplier by Domino's Pizza Enterprises Ltd. (ASX: DMP) in favour of rival Pepsi-Schweppes.

According to a note out of Deutsche Bank, the loss of the Domino's tender could lead to a 3% drop in drink volumes

As well as this, Coca-Cola Amatil has recently launched its Coca-Cola No Sugar product in response to changing consumer preferences.

But retail giant and major customer Woolworths Limited (ASX: WOW) has struck a big blow to its plans by reportedly refusing to stock the product.

What now?

These developments have led investment bank Morgan Stanley to downgrade its shares to an underweight rating and slash its price target to just $8.00.

According to the note, its analysts don't believe the loss of the Domino's contract is unmanageable, but they are concerned that other smaller quick service restaurant operators may follow suit and switch to Pepsi-Schweppes.

Should you buy the dip?

Whilst I do like the company and believe its distribution network gives it an edge over the competition, these recent developments are a surprise and big a concern.

If the share price were to drop to the $8.00 mark that Morgan Stanley has earmarked, I would consider picking up shares. But for now I think it may be safer to sit on the sidelines.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »