Big Upgrade Has Beverage Stock Bubbling

BMO thinks KDP's valuation is cheap compared to its sector peers

Managing Editor
Jun 17, 2019 at 9:43 AM
facebook X logo linkedin

The shares of Keurig Dr Pepper Inc (NYSE:KDP) are up 2.7% to trade at $29.40 this morning, after BMO upgraded the beverage maker to "outperform" from "market perform." While also raising its price target to $34 from $27, the analyst in coverage glowed about the company's valuation, calling it a discount to Keurig's non-alcohol sector peers.

Keurig Dr Pepper stock is currently a chip-shot from its May 15 all-time high of $29.76. KDP has traded within a tight range for most of 2019, with the $26 level serving as a floor and the overhead $30 area keeping a tight lid on breakouts. Year-over-year, the shares are up 47.4%.

For a stock that's performed pretty well, its surprising to see so many analysts remain in the bearish camp. Of the 15 brokerages covering KDP, 10 rate it a "hold" or sell. Plus, the consensus 12-month price target of $29.88 is a modest 4.4% premium to Friday's closing perch of $28.63. This means that more upgrades and/or price-target hikes could vault the equity higher in the short term. 

A short squeeze could also provide some tailwinds for the equity. Short interest increased by almost 7% in the two most recent reporting periods to 18.30 million shares, a record high. This accounts for a healthy 6.9% of KDP's total available float, and nearly eight days' worth of pent-up buying power, at the stock's average pace of trading.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI