Bank of America added Keurig Dr Pepper to its US 1 List of high-conviction investment ideas. Analysts expect the company to unlock significant value through a planned separation into two distinct businesses by early 2027. The split will create Beverage Co. and Global Coffee Co.
The Dr Pepper brand recently surpassed Pepsi in U.S. market share. Bank of America analysts estimate the Beverage Co. unit could reach a valuation of approximately $31 per share post-split. This target is based on an enterprise value-to-EBITDA multiple of 13x to 17x.
The Global Coffee Co. faces near-term uncertainties including commodity price volatility and the search for a permanent CEO. Keurig Dr Pepper shares traded slightly higher in premarket sessions following the announcement.