Keurig Dr Pepper (KDP) Shares Hold Buy Rating Despite JDE Peet’s Acquisition Concerns

Keurig Dr Pepper Inc. (NASDAQ:KDP) ranks among the most active stocks to buy according to Wall Street analysts. On August 27, UBS reduced Keurig Dr Pepper Inc. (NASDAQ:KDP)’s price target to $35 from $40, while retaining a Buy rating on the company’s shares, following the the beverage manufacturer’s announcement of plans to purchase JDE Peet’s.

UBS stated that the acquisition has led to confusion about the company’s catalyst path at a point where investors had grown bullish over enhanced top and bottom line visibility, while also increasing execution risk and driving leverage over 5x following the transaction.

Despite these reservations, UBS argued the market’s response seemed disproportionate, stating that the strategic justification for splitting the businesses makes sense and that the transaction’s robust first-year accretion and possible sum-of-the-parts upside are being disregarded.

Keurig Dr Pepper Inc. (NASDAQ:KDP), a 2018 merger, comprises well-known brands such as Dr Pepper, Canada Dry, Snapple, Keurig single-serve coffee pods, and Ghost energy drinks.

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Disclosure: None. This article is originally published at Insider Monkey.