Stifel lifts Coca-Cola Enterprises to 'Overweight'

JPMorgan analyst John Faucher upgraded the bottler's stock to "Overweight" from "Neutral," expecting sentiment toward the stock to improve over the next few months.

Lower raw material costs should help improve margins, Faucher said, while further gains will come from job cuts, sequential volume growth and distribution of the Monster energy drink.

"We are forecasting significantly less gross margin contraction in 2009, and think gross margin could be up by the end of the year," Faucher wrote in a client note.

Faucher also expects cost savings from a restructuring to add about $40 million to $50 million to operating income in 2009.

The stock price has declined 62 percent so far this year, he said, as the company "missed massively" on earnings in 2008.

"While no company we cover faces as many issues as Coca-Cola Enterprises, no company looks as cheap, either," Faucher wrote.

The stock rose 50 cents, or 5 percent, to $10.39 in afternoon trading.