Keurig Dr Pepper Presents 'Compelling' Valuation Despite Coffee Softness, Says Morgan Stanley Analyst

Shares of Keurig Dr Pepper Inc (NASDAQ: KDP) climbed in early trading on Thursday, but are still trading lower by about 9% year to date.

The stock is at an “opportune entry point,” following its underperformance, according to Morgan Stanley.

The Keurig Dr Pepper Analyst: Dara Mohsenian upgraded the rating for Keurig Dr Pepper from Equal-Weight to Overweight, while keeping the price target unchanged at $36.

The Keurig Dr Pepper: The “strong and highly visible” trends in refreshment beverages offers the company the flexibility to offset weakness in coffee trends, Mohsenian said in the upgrade note.

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“Coffee softness is real and an admitted continued risk factor, but we are heartened that some of [the] recent weakness is tied to more transitory or less value-impacting factors longer-term,” the analyst wrote.

“Said more simply, we don't pretend to have complete visibility in coffee, but with some of the weakness tied more to factors that don't drive long-term value, and a clear path of continued upside in US refreshment beverages, KDP's valuation looks compelling hereafter outsized stock underperformance,” he added.

KDP Price Action: Shares of Keurig Dr Pepper were up 2.05% to $32.40 at the time of publication Thursday.

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