In morning trade the Coca-Cola Amatil Ltd (ASX: CCL) share price has been amongst the worst performers.
In early trade the beverage company's shares are down 2% to $9.38.
Why are Coca-Cola Amatil's shares sliding lower?
With no news out of the company, I suspect that today's decline is likely to be related to a broker note out of Citi.
According to the note, the broker has downgraded Coca-Cola Amatil's shares to a neutral rating from buy. Citi's analysts have also cut the price target on its shares slightly to $9.50 from $9.70.
Its analysts have made the move due to their concerns over its Indonesian and Papua New Guinea business. Citi believes that tough trading conditions will lead to weak sales and profits in these markets.
Which will be a big disappointment for shareholders as these markets are generally regarded as the company's future growth engine.
In light of this weakness, the broker feels that any potential rerating of its shares may be delayed for the now until these markets start to deliver on their potential.
Should you buy the dip?
Based on Citi's earnings per share forecast of approximately 54 cents in FY 2018 and 55 cents in FY 2019, Coca-Cola Amatil's shares are currently changing hands at a little over 17x FY 2019 earnings.
I think that this is about fair value for its current growth profile and dividend yield.
As such, I wouldn't be in a rush to buy its shares unless they were to pull back by 10% or so. At that level I would be a buyer with a long-term view.
In the meantime, consumer staples peers A2 Milk Company Ltd (ASX: A2M) and Bellamy's Australia Ltd (ASX: BAL) could be good options for investors. I think both are trading at attractive prices after recent declines.
