KDP - Keurig Dr Pepper's energy drink play expected to pay off

Bank of America sees long-term upside for Keurig Dr Pepper ( NASDAQ: KDP ) from the new strategic partnership with Nutrabolt and the equity stake it took in the company.

The firm noted the long-term sales and distribution rights will allow Keurig Dr Pepper ( KDP ) to sell C4 performance energy drinks through its owned direct-store distribution network.

"In our view, this deal makes strategic sense given KDP’s appetite to expand its portfolio via partnerships/acquisitions and in that it also provides a meaningful entry into the Energy drink category, closing a gap in the portfolio and adding scale to KDP DSD network."

As for the deal price, BofA said based on estimated 2023 C4 net sales of $650M, the transaction implies an enterprise value of between $2.88B to $2.47B, and an EV/sales multiple of 3.8X to 4.4X.

Bank of America has a Buy rating on Keurig Dr Pepper ( KDP ) and price objective of $45.

Read more details about the Nutrabolt deal.

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