PepsiCo Exceeds Q1 Expectations with Strong Growth and Margin Expansion, Maintains Positive FY2024 Outlook

Goldman Sachs analyst Bonnie Herzog has maintained their bullish stance on PEP stock, giving a Buy rating today.

Bonnie Herzog has given his Buy rating due to a combination of factors reflecting PepsiCo’s robust performance in the initial quarter. Herzog notes that PepsiCo exceeded expectations with its top-line growth and sequential volume improvement despite challenges such as the QFNA recall. This performance has led to an expansion of gross margins and earnings per share that outpaced predictions, which is particularly encouraging against a backdrop of investor skepticism due to recent slowing scanner data trends.

Furthermore, Herzog highlights that management has maintained its fiscal year 2024 guidance, which suggests confidence in the company’s future performance. The guidance includes a minimum of 4% organic sales growth and at least 8% constant currency EPS growth. The first quarter’s organic sales growth was stronger than anticipated, and organic volumes declined less than expected, indicating resilience in the face of headwinds. PepsiCo’s robust brand portfolio, especially Frito-Lay, and long-term growth opportunities contribute to the analyst’s positive outlook, cementing the Buy rating.

In another report released today, Barclays also assigned a Buy rating to the stock with a $184.00 price target.

Based on the recent corporate insider activity of 45 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of PEP in relation to earlier this year.

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PepsiCo (PEP) Company Description:

PepsiCo, Inc. is a food and beverage company that owns brands like Frito-Lay, Gatorade, Pepsi-Cola, Quaker, Cheetos, Doritos, Aquafina and Tropicana. The company was founded by Donald M. Kendall, Sr. and Herman W. Lay in 1965 and is headquartered in Purchase, NY.