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DPS

Dr Pepper Snapple

$86.88

-3.88 (-4.28%)

, KO

Coca-Cola

$41.94

-0.0868 (-0.21%)

11:40
10/04/16
10/04
11:40
10/04/16
11:40

Dr Pepper Snapple slips after partner Bai said to seek sale

Shares of Dr Pepper Snapple (DPS) are sliding following a media report saying that Bai Brands is exploring a potential sale. In a research note this morning, Evercore ISI analyst Robert Ottenstein downgraded Dr Pepper Snapple to Neutral as he believes the loss of Bai, one of its key allied brands, may shift investor's psychology on the stock. BAI BRANDS POTENTIAL SALE: According to a report by Reuters, privately-held U.S. beverage company Bai Brands has hired JPMorgan to explore a potential sale and reach out to possible buyers. Bai could be valued at over $2B including debt, the publication said, citing sources familiar with the matter. Dr Pepper Snapple last year bought a minority stake in Bai after signing a distribution deal, though the company has previously expressed wariness of an outright acquisition. Reuters also added that Coca-Cola (KO) and PepsiCo (PEP) could potentially have an interest in Bai. SALE MAY CHANGE INVESTOR SENTIMENT: Following the media report saying that Bai is looking for a new owner, Evercore ISI analyst Robert Ottenstein downgraded Dr Pepper Snapple to Hold from Buy as he believes the potential sale may shift investor's psychology on the stock and its Allied Brands business, which has driven roughly half of its recent growth. Moreover, Ottenstein estimates a negative earnings impact of 20c-25c if Dr Pepper Snapple lost distribution of Bai. While the analyst acknowledged that it is not certain that Bai's founder and CEO Ben Weiss will succeed in selling the company, he noted that he believes there is a reasonable likelihood that it will get sold. TOPLINE AT RISK: Voicing a similar opinion, Bernstein analyst Ali Dibadj noted that he has cautioned investors for months that Dr Pepper Snapple's topline is at risk given its dependency on allied brands, which are third party and relatively early stage brands distributed by the company. Given that Bai is one of Dr Pepper Snapple's key allied brands, a potential sale could result in a meaningful 100 basis point drag on the company's revenue, he contented. PRICE ACTION: In late morning trading, shares of Dr Pepper Snapple have dropped about 4.5% to $86.86.

DPS

Dr Pepper Snapple

$86.88

-3.88 (-4.28%)

KO

Coca-Cola

$41.94

-0.0868 (-0.21%)

PEP

PepsiCo

$107.25

-0.9988 (-0.92%)

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DPS Dr Pepper Snapple
$86.88

-3.88 (-4.28%)

10/04/16
BERN
10/04/16
NO CHANGE
Target $92
BERN
Market Perform
Dr Pepper Snapple top line at risk if Bai business lost, says Bernstein
After Reuters reported that Bai, the seller of antioxidant infusion drinks that is allied with Dr Pepper Snapple and in which the beverage company has a minority equity investment, is exploring a potential sale, Bernstein analyst Ali Dibadj said the firm's analysis suggests that the loss of Bai from Dr Pepper's system could result in a meaningful 100 basis point drag on the company's top line. Allied brands distributed by Dr. Pepper, like Bai, have been driving at least half of its topline growth recently, added Dibadj, who keeps a Market Perform rating on the stock.
10/04/16
EVER
10/04/16
DOWNGRADE
EVER
Hold
Dr Pepper Snapple downgraded to Hold from Buy at Evercore ISI
10/04/16
10/04/16
DOWNGRADE

Hold
Dr Pepper Snapple downgraded on Bai Brands potential sale at Evercore ISI
As previously reported, Evercore ISI downgraded Dr Pepper Snapple to Hold form Buy. Analyst Robert Ottenstein said reports that Bai Brands is looking for a new owner are credible and could change investor's psychology on the stock and its Allied Brands business. The analyst believes Bai Brands will get sold and result in loss of distribution, negatively impacting earnings by 20c-25c. Further, Ottenstein said consumers are increasingly concerned about sugar and it is on the radar screen of local governments as a revenue source.
10/04/16
10/04/16
DOWNGRADE

On The Fly: Top five analyst downgrades
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. Wells Fargo (WFC) downgraded to Underperform from Market Perform at Raymond James with analyst David Long saying the fallout from the unauthorized account openings will result in continued under performance. The analyst said several additional investigations, lawsuits, and fines have been announced, resulting in a still cloudy outlook. 2. Kinder Morgan (KMI) downgraded to Hold from Buy at Stifel analyst Selman Akyol citing valuation. 3. GrubHub (GRUB) downgraded to Hold from Buy at Stifel with analyst John Egbert citing valuation. 4. Dr Pepper Snapple (DPS) downgraded to Hold from Buy at Evercore ISI with analyst Robert Ottenstein saying reports that Bai Brands is looking for a new owner are credible and could change investor's psychology on the stock and its Allied Brands business. 5. Dollar Tree (DLTR) downgraded to Neutral from Buy at Cleveland Research with the firm saying sales trends appear to have slowed further at Family Dollar as the company struggles with increased price competition, difficult comps, and strategy headwinds. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
KO Coca-Cola
$41.94

-0.0868 (-0.21%)

09/29/16
HSBC
09/29/16
NO CHANGE
HSBC
Buy
AB InBev's goal may be to acquire Coca-Cola, says HSBC
HSBC analyst Anthony Bucalo says SABMiller's (SBMRY) merger with AB InBev (BUD), which its shareholders just approved, will impact "nearly every major company across global beverages," especially Heinenken (HINKY). The combined company "represents a strong vehicle for another transaction" if InBev management chooses to do so, Bucalo tells investors in a research note dated yesterday. The analyst believes AB InBev's ultimate goal is the possible acquisition of The Coca-Cola Company (KO). The entire Coca-Cola bottling system, especially for Mexican giant FEMSA (FMX), is impacted by SABMiller joining with AB InBev, Bucalo contends.
09/29/16
STFL
09/29/16
DOWNGRADE
STFL
Hold
Coca-Cola downgraded to Hold from Buy at Stifel
09/29/16
STFL
09/29/16
DOWNGRADE
STFL
Hold
Coca-Cola downgraded following Pepsi results at Stifel
As noted earlier, Stifel analyst Mark Swartzberg downgraded Coca-Cola (KO) to Hold from Buy. The analyst downgraded the stock after Pepsi (PEP) reported better than expected Q3 results. The analyst says that Coca-Cola's and Pepsi's organic EPS growth appears to be similar, but he believes that Pepsi is less vulnerable to foreign exchange fluctuations. Additionally, he believes that Coca Cola European Bottlers (CCE) is a better investment than Coca-Cola because of the large amount of revenue synergies which that Coca Cola European Bottlers has identified.
09/29/16
09/29/16
DOWNGRADE

On The Fly: Top five analyst downgrades
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. Coca-Cola (KO) downgraded to Hold from Buy at Stifel with analyst Mark Swartzberg saying that Coca-Cola's and Pepsi's organic EPS growth appears to be similar, but he believes that Pepsi is less vulnerable to foreign exchange fluctuations. 2. Fitbit (FIT) downgraded to Underweight from Sector Weight at Pacific Crest analyst Brad Erickson citing his channel checks which indicated that Charge 2, the company's flagship holiday product, is off to a slow start. 3. Discovery (DISCA) downgraded to Market Perform from Outperform at Barrington with analyst James Goss saying that Brexit and sports costs are dragging on its international results and foreign exchange tailwinds are moderating in many geographies. 4. Sonus (SONS) downgraded to Underperform from Market Perform at Cowen with analyst Paul Silverstein saying the firm's industry checks uncovered operational challenges and ongoing employee and executive churn. 5. Alcobra (ADHD) downgraded to Hold from Buy at Cantor and to Perform from Outperform at Oppenheimer. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
PEP PepsiCo
$107.25

-0.9988 (-0.92%)

09/15/16
FBCO
09/15/16
INITIATION
FBCO
Outperform
PepsiCo initiated with an Outperform at Credit Suisse
09/15/16
FBCO
09/15/16
INITIATION
Target $121
FBCO
Outperform
PepsiCo initiated with an Outperform at Credit Suisse
Credit Suisse analyst Laurent Grandet initiated coverage on PepsiCo with an Outperform and a $121 price target. Grandet does not believe the market is giving PepsiCo enough credit for Frito-Lay's marketing and financial strength and the rebalancing of the US beverages portfolio towards faster growing noncarbonated beverages.
09/16/16
09/16/16
INITIATION

On The Fly: Top five analyst initiations
Catch up on today's top five analyst initiations with this list compiled by The Fly: 1. GoPro (GPRO) initiated with a Buy at BofA/Merrill. 2. JetBlue (JBLU) initiated with an Outperform at Imperial Capital. 3. PepsiCo (PEP), Dr Pepper Snapple (DPS), and Monster Beverage (MNST) were initiated with an Outperform at Credit Suisse, while the firm initiated Boston Beer (SAM) with an Underperform. Credit Suisse also initiated Coca-Cola (KO) and Constellation Brands (STZ) with a Neutral. 4. lululemon (LULU) initiated with a Positive at Susquehanna. 5. Target (TGT) coverage assumed with a Neutral at Credit Suisse. This list is just a portion of The Fly's analyst coverage. To see The Fly's full Street Research coverage, click here.

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