Analyst Sees Upside To Dr Pepper Snapple Group Inc. Guidance

Dr Pepper Snapple Group Inc.'s

earnings guidance is significantly "conservative" in light of an improving consumer environment and positive trends for carbonated drinks, an analyst said Friday. Barclays' Michael J. Branca maintained an Equal Weight rating on the beverage company but boosted his target nearly 4 percent to $80 after the company beat fourth-quarter expectations by a small margin. The Plano, Texas company changed hands recently at $76.95, up $1.35. Since August, the shares are up more than 27 percent. The company, spun off from Britain's Cadbury Schweppes in 2008, offered a 2015 earnings forecast Thursday of between $3.80 and $3.88 a share versus the Wall Street consensus of $3.90. But Branca expects profits for the current year will total $4.05 a share. The analyst sees upside coming from "stronger revenue growth" and cash flow, based partly on strong trends in U.S. carbonated beverage consumption. The company forecast revenue growth of 1 percent in 2015 to about $6.2 billion and in line with Wall Street expectations. The company expects 2015 sales of its carbonated beverages "down somewhat," with non-carbonated sales up, in the "low- to mid-single digits," Chief Financial Officer Martin M. Ellen told analysts in a conference call Thursday. If the prediction pans out, the company performance may mirror the larger U.S. market for carbonated soft drinks: volume fell 3 percent in 2013, marking its ninth straight year of declines, according to the trade journal Beverage Digest. Volume for the category of liquid refreshment beverages, which includes Snapple, dropped by 1.6 percent. http://www.beverage-digest.com/pdf/top-10_2014.pdf Dr. Pepper-Snapple claims a 20.7 percent share of the U.S. market for carbonated soft drinks as of 2013, versus a combined 60 percent share for Coca-Cola Co.

and PepsiCo Inc.

. Besides its namesake products, Dr. Pepper-Snapple brands include Sunkist soda, 7UP, A&W, Canada Dry, Crush and Schweppes. Non-carbonated brands include Mott's, Hawaiian Punch, Clamato and others. Dr. Pepper-Snapple last week raised its quarterly dividend by 17 percent and boosted its buyback authorization to $4 billion from $3 billion.