Dr Pepper: Positive Resolution Of PEP Negotiations

Analysts at Deutsche Bank maintain their "Hold" rating on Dr Pepper Snapple Group Inc. (NYSE: DPS) after DPS announced it will maintain its relationship with PEP bottling system. The price target has been raised to $32 from $31.

The firm says “We do not believe there is a material change to current bottling economics with PBG/PAS, which we expected PEP would "sweeten" to retain DPS. However DPS secures a significant upfront payment ($900m pre-tax at deal closing, ~$2/share of value). We had raised this as a possibility, but did not model it in forecasts. DPS will also gain minor incremental Bottling profits (est. $10-15m) on brands handed back by PEP.”

It has raised 2010 EPS from $2.17 to $2.20, primarily on lower interest.

Today, DPS is up 1.30% to $27.10.