BMO Capital downgraded Coca-Cola (KO) and PepsiCo (PEP) and upgraded Dr Pepper Snapple (DPS) as the firm shifts its focus to stocks with “higher upside potential”.

“NEAR-PEAK” VALUATION: BMO Capital Analyst Amit Sharma downgraded Coca-Cola to Market Perform from Outperform based on valuation, saying a meaningful expansion is unlikely as the stock is already trading at the top of its historical range. He added that while the new CEO’s plan to decrease reliance on carbonated soft drinks and realign the portfolio around consumer demand may be positive for operations, it is unlikely to drive upside to estimates in 2017 and 2018. Sharma also said he believes that the expected positive margin impact from the company completing North America bottler refranchising in 2017 is already factored into the stock price. In addition, he said he does not see any transformative transactions for Coca-Cola in the near-term. He maintained a price target of $46.

“PEAK” VALUATION: Sharma also downgraded PepsiCo to Market Perform from Outperform based on valuation, saying while the stock remains “well-positioned” to generate returns, it is already trading at its peak multiple, making meaningful expansion less likely. He added he sees limited earnings upside as the company already operates at “relatively high levels” and has been hesitant to push its cost savings programs to increase earnings growth. Sharma also said transformative M&A is unlikely for the company in the near-to-intermediate term. He raised his price target on Pepsi to $120 from $118.

“DEPRESSED VALUATION”: In addition, Sharma upgraded Dr Pepper Snapple to Outperform from Market Perform, based on his belief that its “attractive earnings growth outlook” makes its stock more likely to rise than a number of its peers’ shares. He thinks that concerns about the sales growth of its Bai unit have resulted in an “attractive entry point” and should dissipate. Sharma said he believes Bai’s sales growth outlook is achievable and could be sustained over the next several years through Dr Pepper’s distribution network, a streamlined approach to stock keeping unit expansion, product innovation and development in adjacent beverage categories. Sharma raised his target on the stock to $105.