Beverage giant Dr Pepper Snapple Group Inc. (
) on Friday caught a downgrade from analysts at Deutsche Bank on a
The firm said it cut its rating on DPS from "Buy" to "Hold,"
seeing small short-term upside.
A Deutsche analyst commented, "DPS retains good long-term
opportunity to expand brand penetration, is aggressively managing
costs, and management strongly committed to returning cash. However
we are moving to a neutral stance as recent strength brings the
stock close to fair value (14.4x, 9x EBITDA), with only 3% upside
to $40 target. We now see more exposure to surging commodity prices
as 2011 progresses (lowering estimates), category growth is still
sluggish, and competitive environment could heat up…We are lowering
EPS (2011 from $2.74 to $2.68) on this basis, but it may also
hinder top-line growth, arguably the most important stock
Dr Pepper Snapple shares were mostly flat in premarket trading
The Bottom Line
We have been recommending shares of Dr. Pepper Snapple (
) since Feb.16, 2011, when the stock was trading at $34. The
company has a 2.59% dividend yield, based on last night's closing
stock price of $38.66.
Dr Pepper Snapple Group Inc. (
) is a "Recommended" dividend stock, holding a Dividend.com DARS™
Rating of 3.5 out of 5 stars.
Be sure to visit our complete recommended list of the
Best Dividend Stocks
, as well as a detailed explanation of
our ratings system here
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