KDP Stock Forecast & Price Target

Keurig Dr Pepper is experiencing steady growth in the US coffee segment, with measured retail sales increasing by 2.1% in the fourth quarter of 2025 to date and sustaining a 2.4% rise in the third quarter. Following a notable increase of 10.3% in organic sales for its non-carbonated business in the previous year, KDP is positioned to align its revenue and earnings growth with consensus estimates for 2026. Furthermore, the company’s robust control over production and distribution, coupled with its strategic partnerships, supports its strong market presence, contributing to a positive outlook for its financial performance.

The financial outlook for Keurig Dr Pepper is concerning due to high pro-forma leverage estimated at approximately 5.2x at the end of 2026, with only a modest reduction to 4.3x anticipated by the end of 2027, despite a projected free cash flow yield of around 9%. Furthermore, significant declines in brewer shipments, down roughly 25% in the third quarter of 2025, pose challenges to revenue generation, although there was a slight improvement in the fourth quarter. Additionally, the company's international sales growth forecast was sharply downgraded from 12.5% to 4.0%, driven largely by weak consumer sentiment in Mexico, which constitutes 50% of its international sales.