PepsiCo, Inc. (NASDAQ:PEP) is making bold operational shifts across its global portfolio as it navigates shifting demand patterns and prepares for key product relaunches.
These moves come as the company looks to balance short-term pressures with long-term growth, especially in its North American and international markets.
Bank of America Securities analyst Peter T. Galbo reiterated the Neutral rating on PepsiCo, raising the price forecast from $145 to $150.
Also Read: PepsiCo’s $2 Billion Healthy Snacks Portfolio Thrives, No-Sugar And Energy Drinks Gain Ahead Of Protein Beverage Launch
On Thursday, the company registered second-quarter adjusted earnings per share of $2.12, beating the analyst consensus estimate of $2.03.
Quarterly sales of $22.726 billion (+1% year over year) outpaced the Street view of $22.292 billion.
Galbo notes that while Pepsi Foods (PFNA) delivered stronger-than-expected results, it may still face headwinds in the near term, particularly due to tough year-over-year comparisons in the third quarter following last year’s promotional period.
The company expects to face a temporary setback in the third quarter before re-launching key brands like Lay’s and Tostitos, which should drive sequential improvement in the fourth quarter.
To protect volumes, PepsiCo is adjusting its promotional strategy to emphasize everyday value and is also undertaking structural margin improvements, including two plant closures.
On the PBNA side, the company is sharpening its revenue growth strategies, phasing out case pack water, and optimizing transportation to lift margins.
International operations are expected to remain the primary growth engine for the rest of fiscal year, with strong contributions from Latin America, particularly Brazil and Mexico, and EMEA.
These regions are benefiting from favorable pricing actions and rising per capita consumption and are projected to grow at a mid-single-digit (MSD) to high-single-digit (HSD) pace organically.
Galbo now forecasts a 2.5% year-over-year decline in the third quarter earnings per share to $2.26, down from a prior estimate of $2.37.
The revised outlook reflects expected total organic sales growth of 2%, a gross margin contraction of 60 basis points (in line with the second quarter), and a smaller 20 basis point drop in operating margin.
Notably, PFNA’s productivity gains and PBNA’s tariff mitigation strategies are expected to have a more pronounced impact in the fourth quarter.
Price Action: PEP shares are trading lower by 0.29% to $145.03 at last check Friday.
Read Next:
-
Russell 2000 Makes ‘No Progress’ Amid Reconstitution Shake-Up: Are Small-Caps Struggling As Large-Caps Soar?
Photo by Erman Gunes via Shutterstock
Latest Ratings for PEP
|
Date |
Firm |
Action |
From |
To |
|---|---|---|---|---|
|
Mar 2022 |
Wells Fargo |
Maintains |
Equal-Weight |
|
|
Feb 2022 |
DZ Bank |
Downgrades |
Buy |
Hold |
|
Feb 2022 |
Barclays |
Maintains |
Overweight |
View More Analyst Ratings for PEP
View the Latest Analyst Ratings
“ACTIVE INVESTORS’ SECRET WEAPON” Supercharge Your Stock Market Game with the #1 “news & everything else” trading tool: Benzinga Pro – Click here to start Your 14-Day Trial Now!
Get the latest stock analysis from Benzinga?
-
PEPSICO (PEP): Free Stock Analysis Report
This article Lay’s, Tostitos Comeback Set To Ignite Q4, But Can PepsiCo Fend Off Q3 Earnings Dip? originally appeared on Benzinga.com
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
