On Wednesday, TD Cowen maintained a Hold rating on Keurig Dr Pepper (NASDAQ:KDP) shares but increased the price target to $40 from $35. The adjustment reflects a revised phasing of the company's earnings estimates, taking into account recent partnerships, comparative year-over-year data, and trends observed in scanner data.
The firm's analyst adjusted the third-quarter constant currency sales growth forecast to 3.7% from an earlier figure, while the fourth-quarter projection was increased to 5.4%. Despite these quarterly adjustments, the full-year sales growth expectation remains unchanged at 4.0%, aligning with the company's mid-single-digit (MSD) guidance.
The full-year 2024 earnings per share (EPS) estimate by TD Cowen stands firm at $1.92. The new 12-month price target of $40 is based on a forward earnings multiple of 19 times the projected EPS.
The revised price target suggests a modest upside from the previous target, reflecting the analyst's updated assessment of Keurig Dr Pepper's financial outlook. The Hold rating indicates that while there may be positive factors influencing the stock's performance, the firm advises investors to maintain their current position without increasing their stake.
In other recent news, Keurig Dr Pepper has seen a flurry of financial adjustments and developments. Deutsche Bank revised its price target for the company's stock, raising it to $37.00, while maintaining a Hold rating. Similarly, Citi upgraded its rating for Keurig Dr Pepper from Neutral to Buy, with a new price target set at $43.00, driven by expected improvements in the U.S. Coffee segment.
These adjustments follow the company's second-quarter earnings report which highlighted a 7% increase in earnings per share and a 3.4% rise in constant currency net sales growth. Keurig Dr Pepper also announced a 7% increase in its annual dividend rate, from $0.86 to $0.92 per share, demonstrating its financial strength and commitment to shareholder value.
In other developments, Keurig Dr Pepper agreed to pay a $1.5 million civil penalty to the U.S. Securities and Exchanges Commission (SEC) to settle charges related to misleading statements about the recyclability of its K-Cup pods.
InvestingPro Insights
Keurig Dr Pepper's (NASDAQ:KDP) recent performance and TD Cowen's updated price target of $40 echoes the company's steady financial growth. InvestingPro real-time data highlights a robust gross profit margin of 55.82% over the last twelve months as of Q2 2024, signaling efficient operations and strong pricing power. Additionally, the company has demonstrated consistent revenue growth, with a 3.4% increase over the same period. Investors should note the company's P/E ratio of 23.83, which, when adjusted for the last twelve months as of Q2 2024, shows a slight decrease to 23.12, suggesting a stable earnings outlook relative to its market valuation.
Keurig Dr Pepper has also been rewarding its shareholders with a growing dividend yield, now at 2.43%, and has raised its dividend for four consecutive years, as per InvestingPro Tips. This could be an attractive point for income-focused investors. On the flip side, the stock is trading near its 52-week high, currently at 98.12% of this peak, and the Relative Strength Index (RSI) indicates that the stock might be in overbought territory. This could suggest that the stock's recent gains might prompt cautious investors to wait for a better entry point.
For those looking to delve deeper into Keurig Dr Pepper's financials and future prospects, InvestingPro offers additional insights. There are more InvestingPro Tips available, which provide a comprehensive analysis to help investors make informed decisions. To explore these further, interested readers can visit InvestingPro's dedicated page for Keurig Dr Pepper at https://www.investing.com/pro/KDP.
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