Keurig Dr Pepper, the Consumer Defensive sector company, was revisited by a Wall Street analyst today. Analyst Sorabh Daga from HSBC downgraded the rating on the stock to a Hold and gave it a $30.00 price target.
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Sorabh Daga has given his Hold rating due to a combination of factors surrounding Keurig Dr Pepper’s recent strategic decisions. The company announced the reversal of its 2018 merger, which, while strategically sound, resulted in a significant increase in net debt to EBITDA ratio, raising concerns about financial leverage. This move, although potentially beneficial in the long term, has created uncertainty around debt reduction and the separation of business units.
Additionally, the valuation of the acquisition appears high, and the expected synergies may not fully offset the dilutive impact on margins. The market reacted negatively to the announcement, with KDP shares dropping significantly. Questions remain about the company’s future strategic direction, particularly regarding its distribution model and the influence of its major shareholder, JAB. These uncertainties have led to a cautious outlook, prompting the Hold rating and a revised target price.
According to TipRanks, Daga is ranked #5582 out of 9952 analysts.
In another report released today, TD Cowen also maintained a Hold rating on the stock with a $36.00 price target.