UBS has upgraded Dr Pepper Snapple Group (DPS) to buy from neutral, saying that it does not believe the market is fully valuing strong fundamentals for the business.
The investment bank today (12 March) lifted its target price for DPSG’s shares from US$42 to $31 and said it expects the company to get another $800m to $1.1bn from a deal with The Coca-Cola Co, similar to the PepsiCo $900m licensing deal it secured recently.
The Coca-Cola deal would be worth between $3 and $5 a share, all of which probably will be returned to shareholders, UBS said.
DPSG’s stock rose by 2.1% to $34.35 in trading yesterday.
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