PepsiCo: A Stable Performer with Uncertain Growth Trajectory – Maintaining Hold Rating

Wells Fargo analyst Christopher Carey has maintained their neutral stance on PEP stock, giving a Hold rating on April 17.

Christopher Carey has given his Hold rating due to a combination of factors that suggest PepsiCo’s performance is stable but not compelling enough to warrant a stronger recommendation. PepsiCo’s first quarter results showed a slight outperformance on the top line, margins, and earnings per share, which were closely in line with expectations, but did not substantially exceed them. The company experienced volume growth, particularly in international markets, with notable increases in Europe and the Asia-Pacific region, including double-digit growth in China. However, the company’s ability to accelerate growth towards the end of the year to meet its full-year targets remains a point of debate.

The report also indicates that while PepsiCo has maintained its outlook for the year, with organic sales expected to grow by at least 4% and a projected core earnings per share of at least $8.15, there are uncertainties surrounding foreign exchange impacts and the ramp-up of organic sales in the second half of the year. Despite a positive price/mix and moderating inflation according to the most recent 10-Q, the hold rating seems to reflect a cautious optimism, recognizing that while the company is moving in the right direction, there are still enough uncertainties and market variables that could affect PepsiCo’s ability to hit its targets, thereby justifying a neutral stance at this time.

In another report released on April 17, RBC Capital also maintained a Hold rating on the stock with a $180.00 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.