June 7, 2017 / 3:23 PM / 3 months ago

BUZZ-Fizzy vs. flat: BMO re-rates Dr. Pepper, Coke, Pepsi

** BMO re-rates its non-alcoholic beverage coverage "to shift focus to stocks with higher upside potential," according to a research note

** Analyst Amit Sharma upgrades Dr. Pepper Snapple to outperform from market perform, increases PT to $105 from $98

** In separate notes, Sharma downgrades Coca-Cola to market perform from outperform (maintaining $46 PT) and PepsiCo to market perform from outperform (while raising PT to $120 from $118)

** Notes that DPS currently trades 405 bps below KO/PEP, the widest valuation gap since 2009

** Sharma writes that KO is trading at over 24x consensus 12M forward EPS estimates, at the top of its 3, 5 and 10 year valuation ranges

** Believes that PEP, while "well-positioned to continue to generate high-single/double-digit total shareholder returns," YTD double-digit stock price increase has limited the co's upside potential

** DPS 2nd best performer in the S&P cons staples sector in early Weds trade, with 0.8 pct rise; both KO and PEP on downside

** Over the last 12 months, DPS (up 1.2 pct), KO (up 0.4 pct) and PEP (up 14.3 pct) have all underperformed the S&P 500 (up 15 pct)

** Graphic: tmsnrt.rs/2r5HoQG (Stephen Culp)

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