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The upgrade call comes as the analysts want to use “an opportune entry point after pronounced stock underperformance, with valuation too low in our minds.”
Coupled with a low valuation, the analysts also highlight “strong and highly visible Refreshment Beverage trends, and mitigating factors around recent Coffee weakness, despite admittedly low forward coffee visibility.”
“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 here after outsized stock underperformance,” the analysts added.
KDP shares are down 11% year-to-date.
