Morgan Stanley Reiterates Equal-Weight Rating on Dr. Pepper Snapple Group After Q4 EPS

In a report published Wednesday, Morgan Stanley reiterated its Equal-Weight rating on Dr. Pepper Snapple Group

. Morgan Stanley noted, “DPS reported adj. Q4 EPS of $0.82, which came in below the Street at $0.85, our $0.86 estimate, and towards the lower end of DPS' implied $0.80-$0.88 guidance with the miss largely owed to higher than expected SG&A. Revenues came in 0.7% below the Street on a 1% decline in shipment volume with price/mix up c.1.5%. Gross margin of 59.2% was in-line with Street, but with the topline miss resulted in 0.7% gross profit downside. SG&A costs were surprisingly higher in the quarter (37.3% vs. Street at c. 35.9%) largely owed to higher employee related costs and marketing spending. In addition, DPS' initial FY13 EPS guidance of $3.04-$3.12 is c.4% below the Street of $3.20 at its mid-point – while largely owed to sensible long-term brand building, we think the market will be disappointed and expect the shares to trade-off today.” Dr. Pepper Snapple Group closed on Tuesday at $45.32.