Keurig Dr Pepper Earnings: Solid Performance in Ready-to-Drink Beverages, but Coffee Remains Soft

We don’t plan any material changes to our $32 fair value estimate for narrow-moat Keurig Dr Pepper after absorbing its first-quarter results. Sales were up 3% and adjusted EPS up 12%, both led by strength in the ready-to-drink beverages while coffee remains a drag. We see no need to change our 2024 forecasts for sales and adjusted EPS to grow 3.4% and 8.5%, respectively. And our 10-year estimates for mid-single-digit sales CAGR and operating margins averaging in the low 20s remain in place. We view shares as fairly valued following a 4% pop after earnings.