Keurig Dr Pepper (KDP) delivered solid Q4 results with the company's 6.2% organic sales growth beating consensus estimates, Morgan Stanley said in a note to clients on Wednesday.
Morgan Stanley maintained its equal-weight rating on the beverage company and lifted its price target to $38 from $36.
The Wall Street firm said it was maintaining the equal-weight rating because it is "intrigued by low relative valuation at only 16x 2026 EPS relative to US Refreshment/International momentum, but still low coffee visibility and US political uncertainty."
The note highlighted the fact that the company kept its early indication of high single-digit EPS growth outlook for this year with "US refreshment topline momentum and greater Ghost accretion likely offsetting rising coffee costs, which was a concern heading into the quarter."
The investment firm said Keurig Dr Pepper pointed to a "softer Q1 start" due to the "impact of a later Easter and one fewer shipping day, as well as the combination of inflation, pricing and productivity slated to improve over the course of the year."
Morgan Stanley said the company's Q1 also indicated an impact from the efforts to build distribution, which are likely to start in March, for the recently acquired Ghost energy drink.
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