Morgan Stanley Resumes Keurig Dr Pepper (KDP) at Overweight

Morgan Stanley analyst Dara Mohsenian resumes coverage on Keurig Dr Pepper (NASDAQ: KDP) with a Overweight rating and a price target of $38.00.

The analyst comments: “We are resuming coverage of Keurig Dr Pepper with an OW, as we believe discounted valuation post the JDE Peet’s merger does not fully reflect appropriate value for the solid growth NA refreshment beverage business, and the planned early 2027 separation into independent Beverage Co. and Global Coffee Co. is a catalyst for unlocking value. For Beverage Co., we see: 1) strong CSD/ energy category growth well above CPG peers, fueled by consumers' need for energy, accentuated by GLP-1 usage, and greater innovation contribution particularly with zero-sugar products, as well as 2) solid CSD/energy sector pricing far above CPG peers in general, driving durably higher OSG, and 3) building contribution from KDP distribution partnerships, which drive fundamentals and create hidden value through KDP’s stakes in high-growth assets. We see outsized value in KDP with 27% base case upside using conservative forecasts ($38 sum-of-parts price target), including a Beverage Co. multiple at a ~7% discount to KO/PEP, a Global Coffee Co. multiple at a ~20% discount to coffee peers and below the lowest valued coffee play, and even greater higher-end range 42% upside upon fairly plausible scenarios, with a 3:1 bull/bear case skew.”

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 $31.06 yesterday.

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