Keurig Dr Pepper gains after Morgan Stanley turns bullish
Joe Raedle
Morgan Stanley upgraded Keurig Dr Pepper (NASDAQ:KDP) to an Overweight rating after having the beverage stock set at Equal Weight.
Analyst Dara Mohsenian pointed to visibility on continued U.S. Refreshment Beverages upside that could provide flexibility to offset coffee weakness. Notably, the refreshment upside is expected to continue going forward, with both a robust and visible industry pricing backdrop, as well as strong and consistent market share gains for the company. "Coffee softness is real and an admitted continued risk factor, but we are heartened that some of recent weakness is tied to more transitory or less value-impacting factors longer-term," noted Mohsenian.
The firm also thinks the sharp drop in KDP's share price has now made valuation compelling. with the stock price at the current level discounting too much risk.
Shares of Keurig Dr Pepper (KDP) moved up 1.75% premarket to $32.30 vs. the 52-week trading range of $30.47 to $41.31. The first half of the year saw mixed returns among beverage leaders Coca-Cola (KO) -5.3%, PepsiCo (NASDAQ:PEP) +2.5%, and Keurig Dr Pepper (KDP) -12.3% as some of the big rush by investors into staples stocks in 2022 went in reverse.
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