Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Keurig Dr Pepper Dips as Goldman Cuts to Neutral on More Balanced Risk-Reward

Published 2022-09-27, 09:50 a/m
Updated 2022-09-27, 09:50 a/m
© Reuters.

© Reuters.

By Senad Karaahmetovic

A Goldman Sachs analyst slashed the rating on Keurig Dr Pepper (NASDAQ:KDP) to Neutral from Buy, sending the company’s shares nearly 1.5% lower today.

The analyst blames the downgrade on a “more balanced risk/reward” on expectations that brewer household penetration and pod attach rates will moderate going forward. Moreover, the analyst sees a slowdown period for the company’s packaged beverage business growth amid a challenging macro environment.

“We see increased risk to KDP’s margins as commodity inflation, especially related to coffee, remains elevated for KDP vs its peers based on our updated commodity tracker,” the analyst said in a client note.

The analyst also slashed the price target to $37 from $39 to reflect modestly lowered FY22 & FY23 estimates, but enough to put Goldman below consensus.

“With limited n.t. positive catalysts and the stock trading at a 6% premium to its beverage peers on a FY23 P/E multiple basis (vs its avg 3-year discount of 2%), we see a better risk/reward elsewhere and therefore move to the sidelines on KDP,” the analyst concluded.

KDP shares are almost flat YTD.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.