Bank of America maintained an optimistic view on Keurig Dr Pepper (NASDAQ: KDP) after a fireside conversation with the administration.
The company’s overall conclusion is that attachment rates appear to be returning to pre-Covid levels. While the indications are that holiday selloff may have been weak for KDP, BofA still sees KDP positioned to deliver on its long-term algorithm over time, but is more likely closer to the lower end of the range in FY23.
The long-term view is that KDP offers investors an opportunity to penetrate the US soft drinks market with a broad range of products that meet multiple needs and dayparts with a sales and distribution platform with scale across all retail channels.
“We expect KDP stock to outperform the broader market as we anticipate solid free cash flow and deleveraging,” noted analyst Bryan Spillane.
BofA’s $45 price target is 23x FY24 EPS estimates, a 1x discount to soft drink peers. The price target also represents more than a 2% upside for KDP shares.
Wolf Value, an associate looking for Alpha, also claimed last month that KDP was undervalued.