Investing.com -- Citi analysts named Keurig Dr Pepper (NASDAQ:KDP) as its top overall pick in the beverage sector in a note Thursday, citing strong momentum in its refreshment beverage business and manageable risks in its coffee segment. 

The firm updated its top Buy-rated picks following rating changes across the consumer packaged goods (CPG) sector, moving KDP to the top spot, followed by Monster, Coca-Cola (NYSE:KO), Boston Beer (NYSE:SAM), Colgate, Coty (NYSE:COTY), Procter&Gamble (NYSE:PG), and PepsiCo (NASDAQ:PEP).

Citi noted that KDP’s near-term trends appear favorable, and the company’s 2025 guidance prudently accounts for risks in coffee.

"We are moving Keurig Dr Pepper (KDP) to our top overall pick as we see momentum in the Refreshment Beverage business, and we believe risk in Coffee is reflected in prudent 2025 guidance," Citi analysts wrote.

While the broader CPG sector faces a challenging first quarter, Citi sees opportunities in companies with better near-term performance, unique growth drivers, and attractive valuations. 

"With our coverage having outperformed by S&P 500 by ~1,200bps in the last month (220bps YTD) with a sector rotation to defensive sectors, we see a difficult 1Q25 setup for CPG stocks," Citi noted.

Monster Beverage (NASDAQ:MNST) also moved higher in Citi’s rankings due to expectations that U.S. sales growth will continue into summer, supported by easier year-over-year comparisons and aluminum price hedging. 

Meanwhile, Coca-Cola was lowered in Citi’s rankings due to concerns about a difficult first quarter despite strong long-term trends.

Citi’s Sell-rated stocks remain Church&Dwight (NYSE:CHD) and Kimberly-Clark (NYSE:KMB) as the firm continues to assess the impact of soft consumer spending and potential tariff implications on the sector.

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