Vita Coco Co. stock soared 16% in Friday trading after the coconut water company was upgraded to buy from neutral at Bank of America. Analysts raised their price objective to $12 from $10. BofA says the ocean freight market is showing signs of stabilizing, which could lead to cost declines for Vita Coco. “In addition, we think shares of Vita Coco are well positioned to outperform in the case of a recession given the company has taken minimal pricing this year making its products more attractive to ‘price conscious’ consumers,” the note said. Ocean freight costs have hurt the company’s results. During the last earnings call, co-Chief Executive Martin Roper discussed the company’s strategy for managing elevated costs. “[L]ate last summer we entered into a multi-year commitments to cover part of our 2022 ocean container needs at an attractive rate,” he said, according to FactSet. “That has proven to be a very prudent decision. We have been strategically patient in entering into additional fixed rate contracts in this elevated market and have focused successfully on securing capacity guarantees for the balance of the year.” Vita Coco announced this week that it’s getting into the canned cocktail business through a partnership with Diageo to produce Vita Coco Spiked with Captain Morgan. Vita Coco stock has run up 24.7% for the year to date.
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