Buy Rating Reiterated for Vita Coco on Strong Q1 Performance and Raised Financial Guidance

Goldman Sachs analyst Bonnie Herzog has reiterated their bullish stance on COCO stock, giving a Buy rating today.

Bonnie Herzog’s rating is based on a thorough analysis of Vita Coco Company’s recent financial performance and management’s forward-looking guidance. Herzog highlights Vita Coco’s Q1 top-line growth meeting expectations, with a significant 2% increase. Moreover, a notable expansion in gross margins, which jumped approximately 11 percentage points year-over-year to 42.2%, has resulted in a substantial earnings per share (EPS) beat. This EPS outperformance, clocking in at $0.24 versus the estimated $0.16 to $0.18, is a key factor in Herzog’s optimistic outlook. The company’s strong start to the year and improved financial metrics, including the revised full-year 2024 net sales guidance to $500-510 million, bolster the rationale behind the Buy rating.
Additionally, Herzog emphasizes the raised gross margin guidance for the year, now at 37% to 39%, and the anticipated adjusted EBITDA of $76-82 million, marking a 16% year-over-year increase at the midpoint. This positive adjustment in guidance reflects management’s consistent track record of exceeding expectations, even amidst a volatile operating environment. Herzog infers that the raised guidance may still be on the conservative side, considering Vita Coco’s expanded distribution, strong innovation pipeline, and growth with new and existing private label customers. This comprehensive evaluation leads Herzog to reiterate the Buy rating, viewing Vita Coco as a unique investment opportunity within the beverage sector.

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Vita Coco Company (COCO) Company Description:

The Vita Coco Co Inc is a plant-based functional hydration platform. Its products include Vita Coco Coconut Water, Private Label including coconut water and oil, and Other including Runa and Ever & Ever product offerings, Vita Coco product extensions beyond coconut water, such as Vita Coco Sparkling, coconut milk products, and others.