Keurig Dr Pepper, the Consumer Defensive sector company, was revisited by a Wall Street analyst today. Analyst Robert Moskow from TD Cowen reiterated a Hold rating on the stock and has a $28.00 price target.
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Robert Moskow has given his Hold rating due to a combination of factors affecting Keurig Dr Pepper’s outlook. The company’s recent announcement to acquire JDE Peet’s and split into two entities has been met with skepticism from investors, leading to a significant drop in stock value. Although the strategic rationale for the split is understood, the approach raises concerns, particularly the increased exposure to the coffee sector, which has been underperforming post-pandemic.
Additionally, there are doubts about the potential synergies between the U.S. and European coffee operations, given their localized nature and limited scale benefits. The acquisition also results in a higher leverage ratio, which could constrain future mergers and acquisitions for the Beverage Co. Management may need to consider divesting certain brands to manage this leverage effectively. These factors contribute to a cautious outlook, justifying the Hold rating.
Moskow covers the Consumer Defensive sector, focusing on stocks such as Clorox, PepsiCo, and Kraft Heinz. According to TipRanks, Moskow has an average return of 2.2% and a 45.13% success rate on recommended stocks.
In another report released on September 24, Barclays also downgraded the stock to a Hold with a $26.00 price target.