This ‘safe haven’ beverage stock is a buy with underappreciated growth potential, says Morgan Stanley
Keurig Dr Pepper’s growth potential has been underappreciated by investors, according to Morgan Stanley. The Wall Street firm upgraded shares to overweight from equal weight. It also inched up its price target to $40 from $38, indicating 16.9% upside potential from Monday’s close. “We see this as an opportune entry point into KDP as we think the market is not recognizing KDP’s building corporate [organic sales growth]/EPS growth prospects vs [consumer packaged goods] peers, with highly visible strength in its US Refreshment segment and continued solid International results, despite ST coffee profit risk,” analyst Dara Mohsenian wrote in an analyst note on Tuesday. KDP YTD mountain KDP in 2025 Mohsenian thinks the beverage stock will continue to benefit from strong pricing power in the broader U.S. refreshment market. In addition, the stock is relatively insulated from escalating global trade tensions. “We also see KDP as a safe haven in a market downturn, with [a] defensive business mix and limited tariff/FX risk, albeit some SNAP risk,” the analyst said, referring to the Supplemental Nutrition Assistance Program for low-income households. Shares inched up 1.3% Tuesday morning after the upgrade. Year to date, the stock is up 6.5%, outperforming the S & P 500’s 4.6% decline. Analysts are split on the stock despite its relative outperformance. LSEG data shows that 10 of 20 analysts covering Keurig Dr Pepper have a buy or strong buy rating. The remaining 10 have a hold rating. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
Source – CNBC
