Wells Fargo Upgrades Dr Pepper Snapple to “Outperform”; Target, Estimates also Raised (DPS)

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Beverage maker Dr Pepper Snapple Group Inc ( DPS ) on Tuesday caught a huge upgrade from analysts at Wells Fargo.

The firm boosted its rating on DPS from "Market Perform" to "Outperform" and lifted its price target range from $36-38 to $45-47. That new range suggests up to an 11% upside to the stock's Monday closing price of $42.45.

A Wells Fargo analyst commented, "We now expect DPS will benefit from a material acceleration in EPS growth in 2013 (+11.7%) and multiple expansion over the next few months. If recent commodity price trends hold over the next quarter, DPS should demonstrate significant earnings leverage in 2013 - well in excess of current 'street' estimates. Furthermore, we think DPS valuation multiples should expand due to: (1) the company's improved performance optics, (2) ongoing rational industry pricing, (3) limited negative impact from increased PEP marketing spend, and (4) a 'flight to quality' in the consumer sector."

Wells Fargo also boosted its fiscal fourth quarter, full-year 2012, and full-year 2013 earnings estimates for the company.

Dr Pepper Snapple shares were mostly flat in premarket trading Tuesday.

The Bottom Line
Shares of Dr. Pepper Snapple Gropup ( DPS ) have a 3.20% dividend yield, based on last night's closing stock price of $42.45. The stock has technical support in the $39-$40 price area. The shares are trading at all-time highs.

Dr Pepper Snapple Group Inc ( DPS ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 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 .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Created by Dividend.com

This article appears in: Investing , Stocks

Referenced Stocks: DPS

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