Piper Sandler is bullish on The Coca-Cola Company (KO.US) and PepsiCo, Inc. (PEP.US), while giving Keurig Dr Pepper (KDP.US) a "neutral" rating.

On Tuesday, Piper Sandler made new rating adjustments to several major companies in the beverage industry. Coca-Cola Company (KO.US) and PepsiCo, Inc. (PEP.US) both received buy ratings, while Keurig Dr Pepper (KDP.US) was given a neutral rating. These ratings reflect Piper Sandler's differing expectations for the future market performance of these companies. For Coca-Cola Company, analyst Michael Lavery and his team emphasized its strong brand influence, top-notch execution, and significant exposure in emerging markets. They believe these factors will drive sustainable growth for Coca-Cola Company. Additionally, Coca-Cola Company's portfolio benefits from high growth rates in the global beverage category and steady market share increases. Looking ahead, this Atlanta-based company still has significant growth potential in emerging markets, especially where Coca-Cola Company has established a strong brand foundation. In the rating for PepsiCo, Inc., Piper Sandler showed optimism. Despite facing some risks in the first half of 2025 and uncertainty in its 2025 performance guidance, analysts believe these factors are already reflected in the stock price. They expect PepsiCo, Inc.'s Frito-Lay business to gradually return to normal over time. Additionally, Piper Sandler applied a price-to-earnings ratio of about 18.5 times for PepsiCo, Inc.'s 2026 earnings, lower than its five-year historical average of 22.5 times. The company also plans to offset some of the impact of incremental discounts through increased productivity. Meanwhile, Keurig Dr Pepper was rated neutral, lower than its beverage peers. Lavery warned that Keurig Dr Pepper faces challenges in the current coffee market due to weak revenue growth momentum, recent surges in coffee input costs, and uncertain incremental pricing opportunities. It is worth noting that coffee bean prices have reached their highest levels in 47 years, while Keurig Dr Pepper has only announced pricing adjustments in the mid-single digits so far, putting pressure on profit margins.