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On Thursday, Evercore ISI made a revision to Pepsico ’s (NASDAQ:PEP) stock price target, bringing it down to $140 from the previous target of $155, while maintaining an In Line rating for the company’s shares. The adjustment follows a period of observed challenges for Pepsico, which has led to several reductions in the company’s financial guidance, primarily due to weaknesses in its Frito-Lay North America (FLNA) segment. According to InvestingPro data, 13 analysts have recently revised their earnings downward for the upcoming period, while the stock trades near its 52-week low of $134.88, significantly below its high of $183.41.
According to Evercore ISI, Pepsico, traditionally recognized for its consistent performance in meeting and surpassing financial estimates, has been experiencing a downward trend since 2024. This has been partly attributed to consumer pressures that have affected demand. Despite generating impressive revenue of $91.85 billion and maintaining strong gross profit margins of 54.89%, the firm indicated that Pepsico’s guidance being set lower than its long-term organic sales growth algorithm of 4-6% and high single-digit percentage EPS growth suggests continued uncertainty. For deeper insights into PepsiCo’s financial health and detailed analysis, InvestingPro subscribers can access comprehensive research reports and real-time metrics.
The report by Evercore ISI points out that while Pepsico’s productivity initiatives are expected to support earnings per share (EPS) growth in fiscal year 2026 and beyond, current top-line trends, coupled with tariffs, foreign exchange (FX) fluctuations, and increased interest expenses, are presenting challenges that the company may not be able to fully mitigate this year.
Furthermore, the analyst noted that several factors are likely to continue impacting Pepsico’s performance and investor sentiment. These include a slow start to the year, a weak consumer environment, health agendas such as the RFK™s health initiative, the prevalence of GLP-1 drugs, as well as ongoing challenges within the FLNA segment. These elements combined are expected to exert pressure on both the company’s results and the stock’s appeal to investors. Despite these challenges, PepsiCo maintains its position as a dividend aristocrat, having raised its dividend for 52 consecutive years, with a current yield of 3.81%.
In other recent news, PepsiCo Inc. reported its first-quarter 2025 earnings, which showed a slight miss in earnings per share (EPS), coming in at $1.48 compared to the analyst forecast of $1.51. However, the company’s revenue exceeded expectations, reaching $17.92 billion against the projected $17.78 billion. PepsiCo has adjusted its full-year guidance due to new tariffs and macroeconomic uncertainties, maintaining its outlook for low single-digit revenue growth. The performance of Frito-Lay North America remains subdued, affecting overall growth and prompting a strategic focus on value investments. Analysts from firms like Goldman Sachs and Deutsche Bank (ETR:DBKGn) have raised questions about the company’s strategies to enhance Frito-Lay’s performance and the impact of tariffs. CEO Ramon LaGuarta emphasized the importance of international markets as a key growth driver, highlighting the company’s commitment to sustainable growth. Despite these challenges, PepsiCo remains focused on optimizing its international portfolio and maintaining its growth trajectory.
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