Robert Moskow, an analyst from TD Cowen, maintained the Hold rating on Keurig Dr Pepper (KDP – Research Report). The associated price target is $32.00.
Robert Moskow has given his Hold rating due to a combination of factors affecting Keurig Dr Pepper’s performance. While the company’s fourth-quarter earnings per share were slightly ahead of market expectations, there was a notable decline in coffee sales which is a cause for concern. Moskow is wary about a swift recovery in the coffee segment but acknowledges that Keurig Dr Pepper’s guidance for mid-single-digit constant currency sales growth and high-single-digit adjusted earnings per share growth in 2024 aligns with its long-term strategy. The anticipated growth is expected to be driven by the U.S. Refreshment Beverages and International segments, rather than the coffee business. Moreover, a higher projected interest expense is likely to limit operating profit growth, contributing to Moskow’s decision to maintain a Hold rating.
Despite a strong performance in the U.S. Refreshment Beverages sector, with sales increasing and market share gains in most liquid refreshment beverage categories, Keurig Dr Pepper’s coffee segment continues to struggle, with a significant drop in sales. Factors such as timing of brewer shipments and lingering effects from exiting private label pod sales have impacted the coffee business. Although there is a slight improvement in pod shipments, Moskow does not hold a confident outlook for a turnaround in coffee. The report also reflects on valuation, noting that the target price is set around the current trading level and below the five-year average multiple, taking into account the subdued prospects for the coffee segment.
Moskow covers the Consumer Defensive sector, focusing on stocks such as Campbell Soup, JM Smucker, and General Mills. According to TipRanks, Moskow has an average return of 5.6% and a 52.11% success rate on recommended stocks.
In another report released today, Morgan Stanley also maintained a Hold rating on the stock with a $34.00 price target.
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Keurig Dr Pepper (KDP) Company Description:
Massachusetts-based Keurig Dr Pepper, Inc. operates as a non-alcoholic beverage company in the US and internationally. It operates through four segments: Coffee Systems, Packaged Beverages, Beverage Concentrates, and Latin America Beverages.
Read More on KDP:
- Keurig Dr Pepper price target lowered to $34 from $37 at Barclays
- Keurig Dr Pepper sees FY24 adjusted EPS growth high-single-digit range
- Keurig Dr Pepper reports Q4 adjusted EPS 55c, consensus 54c
- Notable companies reporting before tomorrow’s open
- Keurig Dr Pepper price target lowered to $36 from $38 at UBS
