Goldman Sachs maintains Buy on Pepsico stock, target at $175

On Wednesday, Goldman Sachs reiterated its Buy rating on Pepsico (NASDAQ:PEP) shares, maintaining a price target of $175.00. The endorsement came after Pepsico’s management presented at the Consumer Analyst Group of New York (CAGNY) conference, providing an optimistic outlook for the company’s long-term growth prospects. Currently trading at $144.77, near its 52-week low of $141.51, the company boasts impressive annual revenue of $91.85 billion and maintains a strong gross profit margin of 54.89%, according to InvestingPro data.

During the presentation, Pepsico’s management highlighted the company’s transformation into a more agile and robust business, focusing on both the top and bottom lines. According to Goldman Sachs analyst Bonnie Herzog, this transformation positions Pepsico well in the competitive market of convenience snacks and beverages. The company’s financial strength is evidenced by its 52-year streak of consecutive dividend increases, with a current attractive yield of 3.76%.

Herzog expressed confidence in Pepsico’s ability to achieve sustainable long-term growth, citing the company’s significant investments in its business operations. These investments, as per Herzog, align with Pepsico’s long-term growth algorithm, which is expected to drive continuous expansion.

The Goldman Sachs analysis also pointed out Pepsico’s current valuation as an attractive investment opportunity. Herzog noted that Pepsico’s stock is trading at a calendar year 2026 price-to-earnings ratio of 16.3 times, which is a 16% discount compared to the Staples sector. This valuation is below Pepsico’s historical average premium of approximately 11% to 14% over the past three to five years. InvestingPro analysis suggests the stock is currently undervalued, with 12+ additional exclusive insights available to subscribers, including detailed valuation metrics and financial health scores.

In conclusion, Goldman Sachs sees a favorable risk/reward scenario for Pepsico shares and has therefore maintained its Buy rating and $175 price target. The firm’s stance reflects a belief in Pepsico’s strategic position and potential for continued growth in the face of near-term operational challenges. For a comprehensive analysis of PepsiCo’s valuation, financial health, and growth prospects, investors can access the detailed Pro Research Report available exclusively on InvestingPro, which provides in-depth analysis of 1,400+ top stocks through intuitive visuals and expert insights.

In other recent news, PepsiCo reported its fourth-quarter 2024 earnings with an earnings per share (EPS) of $1.96, slightly exceeding the forecast of $1.95, but revenue fell short at $27.78 billion against expectations of $27.95 billion. The company announced an increase in its quarterly dividend to $1.355 per share, marking a 7% rise from the previous year, with plans for further increases in 2025. Jefferies adjusted its price target for PepsiCo to $171, maintaining a Buy rating despite challenges in the Frito-Lay division. TD Cowen also revised its price target to $150, keeping a Hold rating, after noting PepsiCo’s guidance for low single-digit organic sales growth in 2025. The company continues to focus on strategic restructuring and innovation, particularly in its international operations, which remain a key growth driver. PepsiCo’s management emphasized the importance of international markets and health-conscious product innovations as part of its ongoing strategy. Despite the revenue miss, analysts like Jefferies express confidence in PepsiCo’s international business and strategic changes.

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