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On Tuesday, TD Cowen analysts reiterated a Hold rating and maintained a $135.00 price target on Pepsico stock (NASDAQ: NASDAQ:PEP), which currently trades at $130.39. The stock, which according to InvestingPro analysis appears undervalued, has seen analyst targets ranging from $110 to $170. The decision comes amid concerns over Frito-Lay’s recent price pack architecture strategy, which has reportedly not resonated well with consumers.
The strategy, which primarily targets single-serve products, has seen a decline in sales. According to the analysts’ evaluation, single-serve sales have decreased by 5.9% year-to-date, compared to a 0.9% decline in 2024. This trend aligns with the company’s overall revenue decline of 0.38% in the last twelve months, despite maintaining impressive gross profit margins of 55.07%. The analysts suggest that the increased price per ounce of the new packs may have contributed to a perceived decline in value among consumers.
In their analysis, the TD Cowen team highlighted that the higher price per ounce for the new pack sizes might have negatively impacted consumer perceptions, leading to a drop in sales. This observation is central to their reasoning for maintaining the current stock rating and price target.
The analysts’ report specifically focused on the first phase of Frito-Lay’s pricing strategy. It appears that this approach has not met consumer expectations, as indicated by the sales figures.
Pepsico’s performance in the market continues to be closely monitored by TD Cowen, with the ongoing evaluation of strategies like Frito-Lay’s being pivotal in their assessment. For deeper insights into PepsiCo’s financial health and detailed analysis, investors can access comprehensive research reports and additional metrics through InvestingPro, which offers exclusive access to over 30 key financial indicators and expert analysis.
In other recent news, PepsiCo reported its first-quarter 2025 earnings, revealing a slight miss in earnings per share (EPS) with $1.48 against the forecast of $1.51, while revenue surpassed expectations, reaching $17.92 billion compared to the anticipated $17.78 billion. The company adjusted its full-year guidance due to new tariffs and macroeconomic uncertainties, with particular challenges in its Frito-Lay North America segment. Despite these obstacles, PepsiCo continues to focus on maintaining low single-digit organic revenue growth. In a strategic move, PepsiCo completed the acquisition of prebiotic soda brand poppi for $1.95 billion, aligning with its broader strategy to diversify its portfolio with health-conscious products. Additionally, PepsiCo announced a 5% increase in its quarterly dividend to $1.4225 per share, reflecting its commitment to delivering shareholder value. Meanwhile, Evercore ISI downgraded PepsiCo’s stock price target to $140 from $155, citing challenges in the Frito-Lay segment and consumer pressures affecting demand. In another development, Eastman Chemical (NYSE:EMN) faced a setback with the loss of a $375 million Department of Energy grant for its Longview, Texas project, although the company plans to proceed with a potentially reduced scope. Morgan Stanley (NYSE:MS) maintained its Overweight rating on Eastman with a $115 target, highlighting the company’s ongoing efforts to explore options for the Longview facility.
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