Andrea Faria Teixeira, an analyst from J.P. Morgan, maintained the Buy rating on Keurig Dr Pepper. The associated price target remains the same with $39.00.
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Andrea Faria Teixeira has given her Buy rating due to a combination of factors that suggest potential growth and value in Keurig Dr Pepper’s stock. The acquisition of JDEP, despite being costly, is seen as a strategic move to expand scale and geographic reach, potentially leading to improved synergies in the long term. The transaction, although complex and requiring patience due to regulatory approvals, is expected to enhance the company’s visibility and valuation as management executes more focused plans independently.
Furthermore, the deal is projected to be accretive to earnings per share in the first year post-combination, assuming a portion of the anticipated synergies are realized. The current valuation of KDP, following a selloff, presents an attractive opportunity, with the potential for significant upside as the company captures synergies and improves its financial metrics. The strategic focus on both cold and hot beverage businesses, despite challenges in consumer preferences, is seen as a positive step in navigating the competitive landscape, supporting the Buy rating.
Faria Teixeira covers the Consumer Defensive sector, focusing on stocks such as Central Garden Pet, Keurig Dr Pepper, and Newell Brands. According to TipRanks, Faria Teixeira has an average return of 2.0% and a 50.70% success rate on recommended stocks.
In another report released today, Citi also maintained a Buy rating on the stock with a $41.00 price target.