Beverage giant Dr Pepper Snapple Group Inc. (
) caught a big upgrade on Friday from analysts at Deutsche Bank,
who cited the company's low relative valuation.
The firm boosted its rating on DPS to "Buy" from "Hold," but
maintained its $39 price target. That target represents an expected
15% upside to the stock's Thursday closing price of $33.94.
A Deutsche Bank analyst commented, "We believe the market has
over-reacted to management's more cautious tone on 2H revenue mix,
and that underlying trends remain healthy. We are lowering Q3
estimate to account for softer mix as consumers favors lower-priced
brands, but think it is more than reflected in the stock, and the
sell-off creates a good buying opportunity."
Dr Pepper Snapple shares rose 37 cents, or +1.1% in premarket
The Bottom Line
We had removed shares of DPS back on Aug.24, when the stock was
trading at $36.53. The company has a 2.95% dividend yield, based on
last night's closing stock price of $33.94. The stock has technical
support in the $30-$32 price area. If the shares can firm up, we
see overhead resistance around the $36-$38 price levels. We would
remain on the sidelines for now.
Dr Pepper Snapple Group Inc. (
) is not recommended at this time, holding a Dividend.com DARS™
Rating of 3.4 out of 5 stars.
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, as well as a detailed explanation of
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