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PURCHASE, N.Y./MINNEAPOLIS - PepsiCo (NASDAQ:PEP), a $186 billion beverage giant with impressive 55% gross profit margins, and Cargill announced Tuesday a collaboration to implement regenerative agriculture practices across 240,000 acres of Iowa farmland by 2030. According to InvestingPro analysis, PepsiCo currently trades near its 52-week low, suggesting potential value for investors interested in companies with strong sustainability initiatives.
The initiative will focus on the companies’ shared corn supply chain in Iowa, where Cargill sources from local farmers to produce ingredients used in PepsiCo products. Practical Farmers of Iowa, a nonprofit organization, will lead the local implementation by providing farmers with technical guidance and financial incentives.
Iowa, which contributes more than 15% of the nation’s corn supply, will serve as the focal point for this program that aims to improve soil health and increase climate resilience.
"By working with farmers to understand what’s best for their farms and partnering across the supply chain we can accelerate the adoption of regenerative agriculture practices," said Jim Andrew, PepsiCo Chief Sustainability Officer.
The collaboration supports both companies’ environmental goals, including PepsiCo’s expanded target to implement regenerative practices across 10 million acres globally by 2030, and Cargill’s similar 10 million acre North American target.
Participating farmers will receive agronomic guidance, incentive payments to reduce the risk of adopting new practices, and access to technical resources. Practical Farmers of Iowa will manage enrollment and oversee measurement and verification of outcomes.
The initiative builds on previous collaborations between the three organizations, according to the companies’ press release statement.
In other recent news, PepsiCo is preparing to release its second-quarter earnings report, with analysts offering varied projections. UBS has reiterated its Buy rating, maintaining a $169 price target, while projecting challenges in organic growth and earnings per share slightly below consensus. BofA Securities, on the other hand, has lowered its price target to $145, citing concerns over slowing sales in North America and a tepid sales environment. Evercore ISI has maintained an "In Line" rating with a $140 price target, predicting lower-than-expected organic sales growth and earnings per share for the quarter. TD Cowen continues to hold a Hold rating and a $135 price target, highlighting a decline in Frito-Lay’s sales due to a new pricing strategy that hasn’t resonated well with consumers. Meanwhile, Eastman Chemical, a partner of PepsiCo, faces challenges after losing a $375 million Department of Energy grant, which may affect its recycling project in Longview, Texas. Despite this, Eastman plans to continue supplying PepsiCo with recycled PET from its Kingsport facility. These developments provide a mixed outlook for PepsiCo’s upcoming financial performance.
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