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Investing.com - TD Cowen has reduced its price target on Keurig Dr Pepper (NASDAQ:KDP) to $28.00 from $36.00 while maintaining a Hold rating on the beverage company’s stock. The stock, currently trading near its 52-week low of $25.34, has declined about 26% over the past six months. According to InvestingPro analysis, the company appears undervalued at current levels.
The firm cited concerns about KDP’s increased coffee exposure and elevated leverage resulting from the company’s JDEP acquisition as key factors behind the lower target, which represents a 12.5x multiple on TD Cowen’s forward earnings per share estimate. Despite these concerns, KDP maintains impressive gross profit margins of 54.9% and offers a dividend yield of 3.61%.
The new price target sits significantly below Keurig Dr Pepper’s five-year average next-twelve-month price-to-earnings multiple of 18.5x, reflecting TD Cowen’s negative outlook on aspects of the acquisition strategy.
Despite the price target reduction, TD Cowen maintained its third-quarter and 2025 earnings per share estimates, expecting KDP to reaffirm its guidance of mid-single-digit local currency net sales growth and high-single-digit local currency EPS growth when it reports results.
The firm highlighted KDP’s upcoming Investor Day following its October 27 results as "an important opportunity for management to assuage concerns about the deal" as the company plans to discuss both the JDEP acquisition and its business split-up plans.
In other recent news, Keurig Dr Pepper has announced a regular quarterly cash dividend of $0.23 per share, payable on October 10, 2025, to shareholders of record as of September 26, 2025. This development comes amid significant changes within the company, including the appointment of Olivier Lemire as president of the U.S. coffee division, following his previous role as president of the Canadian business. In terms of analyst activity, Barclays has downgraded Keurig Dr Pepper’s stock from Overweight to Equalweight, citing concerns over asset reshuffling transactions that may cause uncertainty for at least the next 12 months. Meanwhile, Piper Sandler and UBS have both lowered their price targets for the company’s stock to $35.00, although Piper Sandler maintains an Overweight rating, and UBS holds a Buy rating. Piper Sandler highlighted concerns about the company’s leverage post-acquisition, projecting a pro-forma leverage of approximately 5.2x by the end of 2026. UBS’s adjustment follows Keurig Dr Pepper’s announcement of plans to acquire JDE Peet’s and a subsequent restructuring of its coffee and refreshment beverage assets. These developments reflect a period of strategic adjustments and market responses for the beverage company.
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