Los Angeles, June 13 - Shares in Coca-Cola Co and Pepsi Bottling Group Inc fell on Friday, after a profit warning from the second-largest bottler of Coke drinks stoked worries about weakness in the beverage sector.
Greece's Coca-Cola Hellenic Bottling Company SA on Friday lowered its outlook for earnings, citing poor weather, rising costs and strikes that hurt sales in the early part of the year, and its shares dropped 21 percent.
Deutsche Bank analyst Marc Greenberg said the Coca-Cola HBC warning was a "rare miss" for the strong Coke operator.
Shares of Coca-Cola were down 3.7 percent and stock in Pepsi Bottling, the largest Pepsi bottler, was off 2.6 percent in afternoon trading on the New York Stock Exchange.
"The Coca-Cola HBC warning creates risk for Coca-Cola and (Pepsi Bottling Group)," said Morgan Stanley analyst William Pecoriello in a client note on Friday.
Pecoriello said the warning creates greater risk for Pepsi Bottling, since he was counting on international business to offset a slowdown in the United States.
Still, Pecoriello said in a second note that both Coca-Cola and Pepsi Bottling appeared to have been oversold on the Coca-Cola HBC news.
"Just 2 weeks ago, Coke reiterated its outlook, having had a read on its global April and May results," he said, adding that the company likely was experiencing strength in Latin America and Asia.
Coca-Cola HBC on Friday lowered its forecast for 2008 earnings per share to 1.37 euros to 1.40 euros a share, or earnings growth of 5 percent to 8 percent, down from previous guidance of 1.46 euros to 1.49 euros a share, or profit growth of 12 percent to 15 percent.
Coca-Cola HBC attributed the cut to poor May weather conditions in Russia and Central Europe, economic weakness in Italy, Romania and Ukraine, rising oil prices, and a strike in Greece.
In his note, Pecoriello maintained his second-quarter estimates for Coca-Cola and Pepsi Bottling. The analyst expects Coca-Cola to post quarterly earnings per share of 97 cents and Pepsi Bottling to report a per-share profit of 77 cents.
Pecoriello said both companies' valuations were "undemanding" and said shares in each company could be weak between now and their respective second-quarter reports.
Coca-Cola Enterprises Inc, the world's largest bottler of Coca-Cola drinks, warned on May 28 that it expects a mid- to high-single-digit percentage decline in second quarter profit, excluding one-time items, due to the weak North American economy.
Considering the warnings from the Greek and U.S. bottlers, Pecoriello said there is a risk that Coca-Cola's second-quarter global growth is running at 4 percent rather than the company's forecasted 5 percent growth.
Shares in Coca-Cola were down $2.13 to $55.01 and Pepsi Bottling shares were off 83 cents to $30.65.