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Investing.com - Wells Fargo raised its price target on Pepsico (NASDAQ:PEP) to $154.00 from $150.00 on Friday, while maintaining an Equal Weight rating on the beverage and snack giant’s stock. According to InvestingPro data, PepsiCo, currently valued at $198 billion by market cap, is trading slightly below its Fair Value, with analyst targets ranging from $115 to $172.
The price target adjustment comes as Wells Fargo analyst Chris Carey identified two key debates surrounding the company: sales growth, which remains muted with little change in market perception, and the company’s profit power, particularly regarding whether PepsiCo’s strong double-digit profit growth exiting Q4 2025 represents the right growth rate heading into 2026. InvestingPro analysis reveals impressive gross profit margins of 54.7%, though 5 analysts have recently revised their earnings expectations downward for the upcoming period.
The profit power question emerged as the primary focus among investors, with particular attention to PepsiCo’s Q4 2025 exit rate performance. The stock closed up 4.2% compared to the Consumer Staples Select Sector SPDR Fund’s (XLP) 0.3% gain following the latest results.
Despite organic sales missing expectations due to volume challenges, market attention appears centered on PepsiCo’s profit potential, with fourth-quarter operating income (EBIT) implied to grow mid-teens percentage year-over-year, or mid-20% excluding one-time items from the previous year’s comparable period. The company maintains strong financial health with a P/E ratio of 25.3 and has demonstrated commitment to shareholder returns, having raised its dividend for 52 consecutive years. Get deeper insights into PepsiCo’s financial health and access 10+ exclusive ProTips with InvestingPro.
This market reaction mirrors the previous quarter when PepsiCo shares jumped 7.5% versus XLP’s 1.0% gain, with investors focusing more on earnings power and cost reduction initiatives than on slightly improved sales figures.
In other recent news, PepsiCo Inc. reported its third-quarter 2025 earnings, surpassing analysts’ expectations. The company achieved earnings per share of $2.29, exceeding the projected $2.26. Revenue also outperformed forecasts, reaching $23.94 billion compared to the anticipated $23.86 billion. These results highlight PepsiCo’s strong financial performance in the recent quarter. Additionally, analyst firms have taken note of these developments, though no specific upgrades or downgrades have been mentioned. Investors are likely to be interested in PepsiCo’s ability to consistently exceed market expectations. These developments come amidst a competitive landscape, where companies strive to maintain growth and profitability.
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