Dr Pepper Snapple Group Inc. was downgraded on Tuesday to underperform from sector perform due to several factors, including a recent run-up in the stock's price, increased competition in spending across different markets and lower cost savings, according to analysts at RBC Capital Markets. Shares of Dr Pepper Snapple have been up 50% over the past year, and while volume performance has improved from the year before, it has not improved more than the company's competitors, Pepsi Americas Beverage and Coca-Cola North America, analysts said. The soft drink space is below 2010 levels and dollar-sales growth has been decelerating, making it hard to see how the company can beat earnings per share estimates in 2014. Analysts believe the company's management team has done an admirable job running the company, but see reduced cost savings and slower margin expansion going forward. RBC analysts currently have a $55 a share price target on the stock. Shares for Dr Pepper Snapple were down more than 5% in premarket trading.
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