PepsiCo Stock (PEP) Slips as Frito-Lay Price Cuts Fail to Please Customers

PepsiCo (PEP) stock was down on Tuesday alongside news that the beverage and snack company is having difficulty reengaging customers who were turned off by the high prices for its goods. This is especially true in its snack division, as Frito-Lay has reported revenue drops due to shifting consumer trends.

According to insiders, PepsiCo was aware of the fact that snack prices were too high, but moved forward with its increased prices. This even resulted in Walmart (WMT) warning the company that its chip prices were out of control. When PepsiCo refused to lower prices, Walmart responded by cutting shelf space for the company’s chips and giving that space to its own in-house brands or competitors’ brands, according to Bloomberg.

PepsiCo is testing lower prices now, but the cuts aren’t as deep as analysts hoped. This, combined with the war in Iran causing rising oil prices, has some wondering if customers will return to PepsiCo. While the price cuts might have helped, the increased cost of living from the war means they might not be enough of a discount for consumers. PepsiCo said it will take until summer to learn if the price cuts were enough to draw customers back to its products.

PepsiCo Stock Movement Today

PepsiCo stock was down 0.89% on Tuesday but was still up 9.2% year-to-date. The stock has also rallied 11.71% over the past 12 months.

With today’s news came muted trading of PEP stock, as some 469,000 shares changed hands, compared to a three-month average daily trading volume of about 6.57 million shares.

Is PEP stock a Buy, Sell, or Hold?

Turning to Wall Street, the analysts’ consensus rating for PepsiCo is Moderate Buy, based on seven Buy and eight Hold ratings over the past three months. With that comes an average PEP stock price target of $173.79, representing a potential 11.98% upside for the shares.