Deutsche Bank Likes The Taste Of Dr. Pepper (DPS)

Deutsche Bank upgraded shares of Dr Pepper Snapple Group Inc. DPS to Buy from Hold, and kept its $39 price target. It cited valuation as the reasoning. In the research note Deutsche Bank says, "We are upgrading DPS from Hold to Buy on valuation. 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. We go to a Buy with 17% upside to unchanged $39 target, and see downside limited to about $32. At 7.3x EBITDA, the gap to brandowner peers KO and PEP (9-11x) has widened too much and values DPS as a bottler." Shares of Dr Pepper lost 49 cents yesterday to close at $33.94, a loss of 1.4%.