Keurig Dr Pepper (KDP – Research Report), the Consumer Defensive sector company, was revisited by a Wall Street analyst yesterday. Analyst Christopher Carey from Wells Fargo maintained a Buy rating on the stock and has a $40.00 price target.
Christopher Carey has given his Buy rating due to a combination of factors that suggest a promising outlook for Keurig Dr Pepper. Despite recent volatility and a harsh sell-off post-Q3 2024, the fundamentals of the company have shown improvement, providing a solid foundation for growth into 2025. The Q4 2024 and 2025 guidance is expected to alleviate some of the anxiety surrounding the stock, with revenue and volume/mix showing acceleration across divisions, and a positive earnings per share outlook indicating potential upside.
The U.S. Refreshment Beverages (USRB) segment is experiencing momentum, with a notable profit increase in Q4, which is expected to support both top and bottom-line growth in 2025. Although the coffee segment may face challenges in Q1 due to pricing adjustments, the overall revenue and profit trajectory through 2025 appears positive. Additionally, the company’s free cash flow is projected to grow significantly, with a strong conversion rate, enhancing investor confidence. These factors collectively underpin Christopher Carey’s optimistic Buy rating for Keurig Dr Pepper.
In another report released yesterday, Barclays also maintained a Buy rating on the stock with a $36.00 price target.