UBS reiterated a Buy rating and $35 price target on Keurig Dr Pepper (NASDAQ: KDP) ahead of third-quarter results due Monday (10/27) before the open and an investor update the same day in New York on the JDE Peet's acquisition and planned separation.

While news around the transaction had overshadowed near-term fundamentals, UBS said it still expected a solid quarter, with U.S. Refreshment Beverages and International driving organic growth toward the high end of low single digits, coffee roughly flat sequentially, and guidance unchanged. Management's commentary around timing and capital structure for the JDEP deal and separation was expected to be the more important swing factor for sentiment leaving the event.

The broker acknowledged investors viewed the near-term catalyst path as unclear absent meaningful deal updates or signs of improvement in at-home coffee. However, at current valuation, UBS believed the combined enterprise was meaningfully undervalued, skewing risk/reward to the upside despite the event-driven overhang.