Keurig Dr Pepper heads into Monday's earnings release with short sellers still accelerating — and options traders now pricing in more downside than at any point in recent memory.
Since the previous note published on June 10, the short-interest build has continued. Short interest has climbed further to 6.3% of the free float — roughly 85.6 million shares — up 25% in a single session on June 11 and 41% on the week. The ORTEX short score has jumped in lockstep, from 44.2 on June 1 to 53.4 by June 11, its highest reading in the tracked window. What makes the setup more charged than three days ago is that options positioning has now caught up with the short book. The put/call ratio hit 0.65 on June 12, more than two standard deviations above its 20-day average of 0.50 — a level that implies hedging demand is running hot into the print. Meanwhile, borrowing costs have risen 33% on the week to 0.60%, still low in absolute terms, but directionally consistent with a market that is actively adding short exposure. Availability remains vast at 570% — even as it has tightened sharply from above 900% just days ago — so the short build is still a deliberate directional trade rather than a squeeze setup.
The analyst community is cautiously optimistic, yet divided on the degree. Bernstein initiated coverage with an Outperform rating and a $38 target this week — the freshest signal and among the most bullish on the Street. JPMorgan and Citi both lifted targets modestly after the April print while holding positive ratings, and the consensus sits at buy with a mean target near $33.50, roughly 6% above the current price of $31.71. Bulls point to KDP's US coffee and ready-to-drink momentum — retail sales in both categories growing — and to a near-9% free cash flow yield that looks attractive for a consumer staples name. Bears argue that pro-forma leverage projected at 5.2x through end-2026 leaves little room for error, that brewer shipments fell around 25% in the back half of last year, and that international growth targets have been cut sharply, with Mexico specifically facing softening demand. The stock's 13-times trailing P/E is undemanding, but bears would note the earnings revision trend — EPS surprise ranks in only the 32nd percentile — has historically not supported re-rating.
One supporting nuance on the institutional side: FMR (Fidelity) added roughly 10 million shares in its last reported period, while BlackRock and T. Rowe Price also increased positions meaningfully. That institutional accumulation from major names provides a counterweight to the growing short book, suggesting the stock has genuine long-side conviction at current levels — even as shorter-term traders position for a downside surprise.
Monday's print will test whether KDP's Q2 US volume recovery is broad enough to offset continued brewer weakness and the lingering drag from international markets — and whether that justifies the premium the stock has earned from its 9% one-month rally.
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