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Investing.com - BofA Securities lowered its price target on PepsiCo (NASDAQ:PEP) to $145.00 from $150.00 while maintaining a Neutral rating ahead of the company’s second-quarter earnings report. The beverage giant, currently valued at $186.58B, has maintained impressive gross profit margins of 55.07% despite market challenges. According to InvestingPro data, 4 analysts have recently revised their earnings estimates downward for the upcoming period.
The firm reduced its Q2 2025 earnings per share estimate to $2.02 from $2.03, below the Visible Alpha Consensus of $2.06, citing sequential slowing in sales for PepsiCo’s North American food and beverage divisions.
BofA’s analysis shows potential meaningful sensitivity to operating profit at PepsiCo’s North American food division, though this is not incorporated into its revised estimate.
The price target reduction reflects a lower valuation multiple of 17.5x calendar year 2026 EPS, down from 18x previously, as PepsiCo navigates a tepid sales environment in North America with heightened margin risk.
PepsiCo is scheduled to report second-quarter results, for the period ending June 14, 2025, on July 17. With annual revenue of $91.52B and a strong track record of dividend payments, investors can access comprehensive analysis and 12 additional key insights through InvestingPro’s detailed research report.
In other recent news, PepsiCo has finalized its acquisition of the prebiotic soda brand poppi for $1.95 billion, signaling a strategic move towards health-focused products. This acquisition includes anticipated cash tax benefits, reducing the net purchase price to $1.65 billion, with additional performance-based earnouts. Meanwhile, PepsiCo announced a 5% increase in its quarterly dividend to $1.4225 per share, elevating its annualized dividend to $5.69 per share. This marks the 53rd consecutive year of dividend growth, reflecting the company’s commitment to delivering shareholder value.
On the earnings front, Evercore ISI maintained its "In Line" rating for PepsiCo, projecting Q2 earnings per share of $2.02, slightly below the Street estimate of $2.04. The firm anticipates organic sales growth of 0.9%, citing challenges in North America. TD Cowen also reiterated a Hold rating, noting a decline in Frito-Lay’s single-serve sales due to a new pricing strategy.
In related industry news, Eastman Chemical (NYSE:EMN), which holds a contract with PepsiCo for recycled PET, lost a $375 million grant for its Longview, Texas facility but plans to continue the project with adjustments. Despite these challenges, Eastman is expected to fulfill its contract with PepsiCo using its Kingsport plant.
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