KDP Shares Rally 0.90% in Two Days as JDE Peet’s Acquisition Concerns Fuel Volatility

Shares of Keurig Dr Pepper (KDP) rose 0.55% on Thursday, marking two consecutive days of gains and a 0.90% rise over the past two trading sessions. However, the stock has faced broader volatility, with a recent intraday drop of 1.29% to a record low, reflecting deepening investor skepticism over its strategic direction and financial health.

The company’s controversial $18.4 billion acquisition of Dutch coffee giant JDE Peet’s has emerged as a pivotal factor. The all-cash deal, announced in late August, was executed at a 33% premium to JDE Peet’s 90-day average price, raising concerns about overpayment and debt accumulation. Analysts from institutions including BNP Paribas Exane and Barclays have criticized the transaction, downgrading KDP to “Underperform” or “Equal Weight” amid fears of elevated leverage and uncertain synergies. The stock plummeted over 11% on the day of the announcement and has since traded at a 31.6% discount to its 52-week high.

Plans to split KDP into two publicly traded entities—one focused on coffee and the other on North American beverages—have further fueled market uncertainty. Critics argue the restructuring, which is expected to take until early 2026, may not deliver promised cost savings and could introduce operational challenges. While the company projects $400 million in annual savings, analysts caution that execution risks and a lack of shareholder approval for the acquisition have eroded confidence.

Weak earnings performance has compounded concerns. KDP’s EPS has declined 26% over three years, with net income dropping 28% in the past 12 months. Despite a projected 31% annual EPS growth over the next three years, the stock’s high P/E ratio of 23x has been met with skepticism, particularly given the coffee sector’s vulnerability to inflation and shifting consumer demand. Analysts warn that the premium paid for JDE Peet’s may not be justified by long-term earnings improvements.

Macroeconomic headwinds and industry-specific risks have amplified the sell-off. Rising input costs and soft consumer demand in the broader packaged goods sector have pressured margins, while the company’s debt burden—financed by an $18.4 billion bridge loan—has drawn scrutiny. Price targets from major banks have been slashed, with BNP Paribas Exane and Barclays setting targets 26% below recent levels. The market’s reaction underscores a lack of clarity around KDP’s ability to integrate JDE Peet’s and deliver on restructuring promises.