JPMorgan raises PepsiCo stock price target to $159

On Monday, JPMorgan analyst Andrea Teixeira increased the price target for PepsiCo (NASDAQ:PEP) stock to $159 from $158, while maintaining a Neutral rating on the shares. The adjustment comes ahead of the company’s first quarter earnings report, which is expected to be released on Thursday, April 24, 2025, before market open. Currently trading at $142.84, near its 52-week low of $138.33, PepsiCo maintains impressive gross profit margins of 54.89% according to InvestingPro data.

Teixeira has revised the Organic Sales Growth (OSG) estimates for the first quarter of 2025 and the full year downward, citing softer performance in the Frito-Lay North America (FLNA) segment and a more conservative outlook for International sales. The new OSG forecasts are set at +1.1% for the quarter and +2.1% for the year, compared to the consensus of +0.5% and +2.2%, respectively. This comes as InvestingPro data shows 11 analysts have recently revised their earnings expectations downward for the upcoming period.

The analyst has also adjusted the earnings per share (EPS) estimate for the first quarter to $1.49, aligning with the consensus, down from the previous $1.52. However, the full-year EPS estimate has been marginally increased by $0.01 to $8.32, which is slightly ahead of the consensus of $8.26. This adjustment reflects a lighter foreign exchange headwind that more than offsets the lower OSG.

Teixeira’s commentary anticipates that investors are preparing for a subdued quarter, as U.S. consumption trends for snacks have weakened and beverage sales continue to be unimpressive. Additionally, International sales are expected to have a smaller impact in the first quarter, and planned productivity phasing and investments are likely to affect margins.

Despite these challenges, Teixeira does not expect significant changes to the company’s guidance on a constant-currency basis at this stage. PepsiCo management has previously indicated planning for a softer first quarter with prospects of improvement by the summer. However, the analyst notes that given the current macroeconomic environment, these expectations could be subject to change. With a current dividend yield of 3.79% and a track record of 52 consecutive years of dividend increases, as revealed by InvestingPro’s comprehensive analysis (which includes 10+ additional key insights available to subscribers), PepsiCo maintains its position as a prominent player in the beverages industry.

In other recent news, PepsiCo has made headlines with several significant developments. The company announced its acquisition of Poppi, a prebiotic soda brand, as part of its strategy to expand its carbonated soft drink portfolio with healthier options. UBS analyst Peter Grom maintained a Buy rating on PepsiCo, with a price target of $175, highlighting the acquisition’s alignment with consumer demand for health-oriented products. However, Jefferies analyst Kaumil Gajrawala adjusted PepsiCo’s price target to $165 from $170, citing challenges in the Frito-Lay division and potential delays in cost savings. Meanwhile, Barclays (LON:BARC) downgraded PepsiCo’s stock from Overweight to Equal Weight, lowering the price target to $156, reflecting concerns about the Frito-Lay North America division’s volume recovery. This cautious stance is balanced by Barclays’ belief in PepsiCo’s long-term growth potential, supported by international momentum and productivity initiatives. Additionally, the beverage industry faces regulatory challenges as Robert F. Kennedy Jr. advocates for a soda purchase ban with food stamps, potentially impacting sales for major companies like Coca-Cola (NYSE:KO), PepsiCo, and Keurig Dr Pepper (NASDAQ:KDP). This proposal has sparked debate and could influence future revenue streams for these beverage giants.

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