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On Tuesday, CFRA analyst Garrett Nelson revised the price target for Pepsico stock, listed on (NASDAQ:PEP), to $175 from the previous $190, while sustaining a Buy rating on the shares. The adjustment comes after Pepsico released their fourth-quarter earnings, with an adjusted EPS of $1.96, which is a 10% increase from $1.78 in the same quarter the previous year and $0.02 above the consensus estimate. Currently trading at $150.27, near its 52-week low, the stock maintains impressive gross profit margins of 54.88%. InvestingPro analysis reveals 12 additional key insights about PEP’s financial health and market position.
The earnings beat was attributed to stronger-than-expected margins, despite a slight 0.2% dip in net revenue to $27.78 billion, which was $110 million below the consensus. The volume decrease of 1% in Convenient Foods and a flat performance in Beverages were also noted. However, Pepsico’s gross margin outperformed expectations, contracting only 40 basis points to 52.6%, which was 50 basis points better than the consensus had anticipated. With a market capitalization of $208.56 billion and a solid dividend yield of 3.61%, PEP remains a prominent player in the Beverages industry. For deeper insights into PEP’s financial metrics and comprehensive analysis, investors can access the detailed Pro Research Report available on InvestingPro.
In light of the recent financial disclosures, Nelson has adjusted the 2025 adjusted EPS estimate down by $0.25 to $8.50 and introduced a $9.00 estimate for 2026. The target price is based on a forward P/E of 19.4x for 2026, which represents a discount to Pepsico’s five-year mean forward P/E of 24.0x.
Pepsico has also provided guidance for the full year, expecting a low-single-digit increase in adjusted EPS relative to the 2024 earnings of $8.16. This forecast is slightly below the current consensus of $8.53, implying a year-over-year growth of 4.5%. However, Nelson highlighted Pepsico’s consistent history of conservative guidance followed by outperformance, with the company only missing EPS expectations once since 2008.
Despite facing industry headwinds, Nelson maintains a Buy rating on Pepsico shares, seeing value at the current levels after the stock’s recent decline. This view aligns with InvestingPro’s Fair Value analysis, which suggests the stock is currently undervalued. The company’s impressive 52-year streak of consecutive dividend increases and strong cash flows further support Nelson’s confidence in Pepsico’s financial strategy and its ability to continue delivering shareholder value amidst market challenges.
In other recent news, Pepsico has been the focus of several recent analyst notes and developments. Despite a softer outlook for 2025, Citi has maintained a Buy rating on Pepsico shares with a $195.00 price target. Pepsico’s fourth-quarter earnings per share (EPS) came in at $1.96, exceeding analyst expectations. However, the company’s initial guidance for 2025 fell below its long-term growth algorithm.
On the other hand, Piper Sandler maintained an Overweight rating on Pepsico stock with a steady price target of $171.00, focusing on the company’s potential rebound in 2025, particularly through its Doritos brand. Additionally, Evercore ISI adjusted its outlook on Pepsico shares, reducing the price target from $180 to $160 while keeping an In Line rating, citing challenges in the U.S. market and potential impact of health policies.
Meanwhile, UBS reiterated its Buy rating on Pepsico shares with a steady price target of $175.00, despite subdued investor sentiment. Lastly, the US Federal Trade Commission (FTC) has recently filed a lawsuit against PepsiCo Inc under a rarely used 1930s law known as the Robinson-Patman Act. These are among the recent developments concerning Pepsico.
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