Investors should buy Dr Pepper Snapple shares because the company's earnings this year will come in above current expectations due to strong sales for its Bai drinks brand, according to Jefferies.
The firm upgraded the beverage company to buy from hold.
"Bai is an under-appreciated growth platform at DPS," analyst Kevin Grundy wrote in a note to clients Friday. "On-trend and rapidly expanding, we expect Bai to contribute 2-3 pts to DPS's core sales growth over the next 3-5 years, which should drive a re-rating for the stock. Risk-reward appears favorable with Bai contribution."
Dr Pepper Snapple acquired Bai Brands for $1.7 billion in November.