HSBC analyst Sorabh Daga downgraded Keurig Dr Pepper (KDP) to Hold from Buy with a price target of $30, down from $42, following the company’s acquisition of JDE Peets (JDEPF). Keurig did not need to lever up to exit the coffee business, the analyst tells investors in a research note. The firm says the company paid a “rich” valuation for JDE while the deal margin dilutive and comes with a heavy debt load. HSBC questions Keurig Dr Pepper’s ability to de-lever and how its debt will be split between the coffee and soft drink units post separation.
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