Keurig Dr Pepper (KDP) is a Glass Half Full Despite Guiding Below Expectations - Morgan Stanley

Morgan Stanley analyst Dara Mohsenian reiterated an Equalweight rating and $36.00 price target on Keurig Dr Pepper (NASDAQ: KDP) after the company issued weaker than expected CY22 guidance. That said, the company is in transition and the analyst remains EW, seeing the glass as more half full given KDP is morphing into a higher revenue growth company even post COVID at a now more reasonable valuation.

The analyst stated "On the positive side from a stock perspective coming out of the meeting, KDP clearly seems to be morphing into a higher revenue growth company even as it cycles COVID, with 6-7% reiterated 2021 revenue growth, but also the new point that KDP guided to MSD three-year topline growth going forward. This is above our prior 3-4% forecast, albeit with limited details on the key drivers behind the forecast, which limits our visibility. In terms of positive meeting details, KDP reiterated that heritage Keurig it is still on track for an estimated at least 2M household additions in CY21, which is positive given it is in-line with LT trend even after cycling an above algorithm COVID aided 3M household addition in 2020. KDP also expressed confidence in continued heritage Dr. Pepper growth prospects going forward with share gains, on the back of heightened innovation success and improved marketing under KDP’s strong management team (and even some growth on the alcohol side, with KDP highlighting its $130M retail sales RTD business in Canada), as well as a rationale industry pricing environment."

For an analyst ratings summary and ratings history on Keurig Dr Pepper click here. For more ratings news on Keurig Dr Pepper click here.

Shares of Keurig Dr Pepper closed at $33.20 yesterday.

You May Also Be Interested In

• Morgan Stanley on Boeing (BA): 'We expect the company to provide additional feedback'
• Craig-Hallum Assumes DiaMedica Therapeutics Inc. (DMAC) at Buy
• Herc Holding (HRI) PT Raised to $115 at BofA Securities