Keurig Dr Pepper  (KDP) - Get Report   fell some 4% Thursday afternoon after Morgan Stanley downgraded the stock to underweight from equal weight on concerns about valuation and greater potential risks in the coffee segment.

Analyst Dara Mohsenian also lowered the company's price target from $27 to $24. That sent shares down 3.9% to $26.96 at 12:30 p.m. ET.

Keurig Dr. Pepper has been focused on cutting its leverage by more than 50% by 2021. Management projects a net debt-to-adjusted EBITDA ratio of "below three times" within two years. At year-end 2018, that leverage was down to 6.9 times vs. its third-quarter peak of 11.4 times. Its leverage ratio is above peers Coca-Cola (KO) - Get Report (2.5 times) and PepsiCo (PEP) - Get Report (1.8 times).

Meanwhile, Morgan Stanley forecast top line coffee growth of around 1.5%, well below the 4% long-term growth rate implied by the market.

Company is facing higher risk, given its debt leverage and "a more volatile and opaque coffee business, in our view, than a typical [consumer packaged goods] business model," analyst Dara Mohsenian wrote to clients.

Mohsenian also cited negatives such as aspirational cost synergies from the Dr Pepper deal, and debt limiting the company's M&A potential.

Keurig Dr Pepper has five buys, 10 holds, one sell and one underweight rating, with a consensus price target of $28.29, according to FactSet. Its dividend yield is currently about 2.2%.

KDP plans report first-quarter results before the market opens on Thursday, May 9.