Things have not been great for beverage giant PepsiCo (PEP) of late. With weight-loss drugs cutting into snack purchases and more and more people eschewing sugary beverages for health reasons, a lot of people just are not buying what PepsiCo offers any more. But PepsiCo is not taking this lightly, and that shows up in today’s trading, as shareholders piled in and gave the stock a nearly 2.5% boost in share price.
Indeed, PepsiCo is not taking this lightly at all. The head of the United States beverage business, Ram Krishnan, reportedly starts his day at 5:00 in the morning, with a local sales team meeting. A manager meeting follows at 7:00, and then, at 8:00, he—along with another team—starts visiting stores to see how displays of PepsiCo goods are presented.
This comes at a time when there is not only declining interest, but also active pushback from the government itself. With the new Health and Human Services Secretary, Robert F. Kennedy Jr., referring to large portions of the product line as “poison,” that does make selling a little harder than it used to be. But Krishnan is fighting back in a hundred different ways, including some that emphasis an old adage about the advantages of joining them when beating them just does not work.
What Joining Them Looks Like
We have already heard about PepsiCo’s moves to bring out more healthy alternatives. It recently bought the Poppi line to drive up interest in the healthier notion, and it is also putting some extra marketing capability to work with a new hire.
PepsiCo brought in Mark Kirkham to serve as chief marketing officer for the United States beverage market, and his position will start April 7. Kirkham—a 14 year veteran of PepsiCo—will step in for Greg Lyons, who is leaving PepsiCo to “pursue an external opportunity.” Lyons, interestingly enough, held that slot since 2018. That spot is reportedly “prone to churn,” which means Lyons’ nearly eight-year run was impressive by any standard. Kirkham, therefore, will have big shoes to fill and in a market that is increasingly arrayed against him.
Is PepsiCo a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on PEP stock based on nine Buys and seven Holds assigned in the past three months, as indicated by the graphic below. After a 7.13% loss in its share price over the past year, the average PEP price target of $164.43 per share implies 8.09% upside potential.
