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Investing.com -- HSBC upgraded Keurig Dr Pepper (NASDAQ:KDP) to Buy from Hold and raised its target price to $42 from $36, citing strong first-quarter results in soft drinks that supported the company’s full-year guidance despite a weak consumer environment and tariff volatility.
KDP reported 6% growth in net sales and a 10% increase in comparable EPS in the first quarter, allowing it to reaffirm guidance for mid-single-digit revenue growth and high-single-digit EPS growth for the full year.
HSBC said the soft drink business led performance, with market share gains for core brands including Dr Pepper, Dr Pepper Zero Sugar, and Canada Dry.
Energy brands GHOST and C4 also contributed, and the firm sees opportunity to take share in regions where KDP competes with PepsiCo (NASDAQ:PEP).
“The brand appears trapped in a PepsiCo logistics platform that we think is broken and possibly beyond repair,” analysts at HSBC said.
In coffee, KDP raised prices ahead of peers, helping to protect the single-serve category.
While sales declined 3.7% in the quarter, HSBC expects traditional price gaps to normalize by the second half.
HSBC raised its 2025 EPS estimate to $2.06 from $2.03. The new $42 price target implies 22% upside and a 2026 price-to-earnings multiple of 19.2.