Keurig Dr Pepper Inc. (KDP) has strong exposure to the at-home coffee segment that will prove to be a winner even in the post-COVID world, according to Morgan Stanley.

The Keurig Dr Pepper Analyst: Dara Mohsenian upgraded Keurig Dr Pepper from Equal-Weight to Overweight with a price target lifted from $32 to $34.

The Keurig Dr Pepper Thesis: Keurig, the coffee portion of the business, accounts for around 40% of the company's total sales and 45% of total profit, Mohsenian wrote in the note. The unit has seen a near-term boost as consumers were left with little option but to get their caffeine fixes at home.

But the stock has underperformed its peers on a year-to-date basis as its at-home coffee gains are partially offset by weakness in away-from-home beverages.

However, Mohsenian said the coffee business could prove to be sticky in a post-COVID reality due to higher unemployment rates, more people working from home, and consumers feeling a need to continue using the coffee maker after spending $60 to $180 on the brewer. At the same time, the legacy cold beverage business will rebound as dining out trends improve.

Also, Keurig Dr Pepper's stock float is now above the S&P 500 threshold and it's a likely candidate to be included in the index.

KDP Price Action: Shares of Keurig Dr Pepper were trading higher by 2% at $29.88.