Text size Justin Sullivan / Getty Images Coca-Cola shares are rising early Wednesday morning, a day after launching better-than-expected earnings. The reason: An update from Morgan Stanley, which argues that stocks have become too cheap. Analyst Dara Mohsenian raised its rating on Coca-Cola (ticker: KO) shares to Equal Weight's Overweight, and added $ 2 to its target price, bringing it to $ 54. The move comes as the "recent underperformance of the stock and the massive valuation discount against its peers has become too steep in our minds. " Coca-Cola shares have fallen 13% this year, lagging behind PepsiCo (PEP), which is down just 1.4%, the S&P 500, which is up 1%, and even the Dow Jones Industrial Average, which it is at 5.7%. He admits that investors should be concerned about the impact of the coronavirus pandemic, given that about half of Coca-Cola's business comes from consumers who buy their products away from home, at restaurants, sports events and movie theaters. However, he argues that the second quarter probably marked a bottom for Coca-Cola, especially since future analyst estimates seem more reasonable as they now more fully reflect the risks related to Covid-19, and the valuation of actions seems compelling. Coca-Cola shares had a boost when the company reported earnings earlier this week: while it is still seeing an impact on pandemic sales, its earnings were slightly better than expected, and Coca-Cola included language in its press release that has led some investors to believe that the worst of the Covid-related pain may be over. In addition to low valuation and lower investor expectations, Mohsenian believes Coca-Cola could get a boost from positive vaccine news, as that could herald the reopening of so many public places and events where the company sells its product. He is also a fan of his management team, which as "a proven record of a substantial acceleration of organic sales growth." Coca-Cola has risen 1.3% to $ 47.81 in recent operations. Write to Teresa Rivas at teresa.rivas@barrons.com .