11:51 AM EDT, 10/22/2024 (MT Newswires) -- Keurig Dr Pepper ( KDP ) is likely to deliver a "solid" Q3 driven by coffee performance while facing slight pressures in the US refreshment beverages sector, RBC Capital Markets said in a report Tuesday.

"In beverages, [Keurig Dr Pepper ( KDP )] owned brands show sequential acceleration but with deceleration in volumes and acceleration in pricing," RBC said, adding that it is concerned about C4's slowdown in the energy drink category, which has seen year-over-year growth drop by more than half, but growth in Electrolit and La Colombe may help offset this, while coffee volumes have improved to the positive mid-single digits percentage range despite slightly decelerating pricing.

Anticipated coffee segment enhancements include the Q3 launch of K Brew + Chill, increased marketing efforts, and the introduction of new premium partner brand pods in Q4, RBC said, adding that "[o]verall, we expect a solid quarter, driven by coffee performance, without too many surprises."

"In the international segment, readthroughs from peers suggest some consumer softness in Latin American markets including Mexico, which have slowed over the last several months," RBC said.

RBC expects the company to reaffirm its 2024 guidance, with the lower end of the range being more realistic since the company hasn't factored in significant consumer improvements.

RBC has an outperform rating on Keurig Dr Pepper ( KDP ) with a price target of $41.

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