PepsiCo stock price target cut to $160 by Evercore ISI

Looking ahead to fiscal year 2026, Evercore ISI projects an EPS growth of roughly 7% to $9.10. This forecast is based on a price-to-earnings (P/E) ratio of 19x, down from the previous 20.5x, factoring in the aforementioned political and category risks. The stock currently offers a 3.63% dividend yield and maintains relatively low price volatility with a beta of 0.55. Access the complete PepsiCo (NASDAQ:PEP) Pro Research Report and analysis of 1,400+ other stocks through InvestingPro. The stock currently offers a 3.63% dividend yield and maintains relatively low price volatility with a beta of 0.55. Access the complete PepsiCo Pro Research Report and analysis of 1,400+ other stocks through InvestingPro.

The rationale behind the price target adjustment is tied to several factors. The analyst cites the need for growth in the U.S. market and the potential impact of health policies from the Robert F. Kennedy (RFK) foundation as challenges for PepsiCo's stock performance. The firm believes these issues may make it difficult for the stock to sustain a 20x multiple. This concern aligns with InvestingPro data showing 4 analysts recently revising their earnings estimates downward. Discover 10+ additional exclusive ProTips and comprehensive analysis with an InvestingPro subscription.

Evercore ISI has also slightly lowered its earnings per share (EPS) estimate for fiscal year 2025 to $8.50 from the previous $8.65. This change reflects expectations of approximately 3% organic growth and a 35 basis points margin expansion. However, the firm anticipates continued top-line weakness in PepsiCo's Frito-Lay North America (FLNA) and Pepsi Beverages North America (PBNA) segments, with additional margin pressure in FLNA as the company reinvests to improve volume trends.

The revised EPS estimate assumes a growth rate of around 4.5%, which falls approximately 1% short of the consensus estimate of $8.55. Looking ahead to fiscal year 2026, Evercore ISI projects an EPS growth of roughly 7% to $9.10. This forecast is based on a price-to-earnings (P/E) ratio of 19x, down from the previous 20.5x, factoring in the aforementioned political and category risks.

In other recent news, PepsiCo is gearing up for its fourth-quarter earnings release for fiscal year 2024, with UBS maintaining a Buy rating on the company's stock and a steady price target of $175. The firm's forecast for the quarter's earnings per share (EPS) aligns with the consensus among analysts at $1.94. Simultaneously, PepsiCo is facing a lawsuit from the US Federal Trade Commission under the rarely invoked Robinson-Patman Act, a law that prohibits price discrimination against retailers.

In terms of business expansion, PepsiCo recently acquired Siete Foods for $1.2 billion, marking a strategic move to grow within the health-conscious food industry sector. This acquisition is anticipated to enhance PepsiCo's offerings. Deutsche Bank (ETR:DBKGn) upgraded PepsiCo shares from Hold to Buy, adjusting the price target to $184 from $179, while Piper Sandler initiated coverage on PepsiCo shares, assigning an Overweight rating and setting a price target of $171.00.

Other recent developments include a decrease in demand for recycled plastic, a challenge that PepsiCo is addressing by incorporating chemical recycling for various plastics. Finally, PepsiCo announced a 7% increase in its quarterly dividend to $1.355 per share, following a strong financial performance with net revenue surpassing $91 billion in 2023. These are the recent developments that investors may find noteworthy.

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