Shares of Keurig Dr Pepper (KDP) - Get Report climbed 5% to a bit more than $30 Monday after an analyst from BMO Capital Markets upgraded the beverage company and raised his price target to $34 from $27.

Analyst Amit Sharma wrote in a note to investors that the Burlington, Massachusetts-based company's stock is trading at a next-12-months P/E multiple of 22, a 200-basis point discount to some of its global-beverage peer rivals trading at around 23.9 times.

Keurig Dr Pepper owns single-serving coffee brewing systems and such soft drink brands as Dr Pepper, Canada Dry, Crush, Schweppes, Sunkist soda, 7UP and A&W, among others.

Sharma said about half of Keurig Dr Pepper's 15% to 17% earnings-per-share compounded annual growth rate will come from $600 million of deal synergies, on which management is likely to deliver. He sees "little, if any," likelihood that the company will report an earnings disappointment in the coming few years.

Beyond 2021, Sharma said, the company should be able to show high-single-digit EPS growth as K-cup single-serve-pod price discounting will moderate after hitting an "optimal" level in 2020. A large and highly efficient pod manufacturing facility will come online in 2021 and create incremental benefits, he wrote.

Management should be able to lower its balance-sheet leverage to less than three times by 2021, he wrote, which will free up around $2 billion of cash for special dividends, stock buybacks, or new accretive acquisitions.