Goldman Sachs analyst Bonnie Herzog maintained a Hold rating on Keurig Dr Pepper on August 25 and set a price target of $34.00.
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Bonnie Herzog has given her Hold rating due to a combination of factors surrounding Keurig Dr Pepper’s recent strategic moves. The company’s announcement to acquire JDE Peet’s, valued at approximately €15.7 billion in equity, is expected to bring about significant cost synergies and EPS accretion. However, while the acquisition presents strategic benefits and potential growth, there are concerns regarding the long-term growth and margin potential in the global coffee sector, particularly after the initial cost synergies are realized.
Additionally, despite the promising international growth opportunities and the strength of KDP’s core US refreshment beverage business, there are ongoing challenges within the coffee segment, especially in the US market. These challenges, coupled with investor apprehension about the company’s increased focus on coffee through the JDE Peet’s acquisition, contribute to the cautious outlook. The current stock price slightly exceeds the 12-month price target, indicating limited immediate upside potential, which supports the Hold rating.
Herzog covers the Consumer Defensive sector, focusing on stocks such as Constellation Brands, Monster Beverage, and Philip Morris. According to TipRanks, Herzog has an average return of 5.1% and a 57.64% success rate on recommended stocks.
In another report released on August 26, TD Cowen also maintained a Hold rating on the stock with a $36.00 price target.