PepsiCo (PEP – Research Report), the Consumer Defensive sector company, was revisited by a Wall Street analyst on April 25. Analyst Zheng Feng Chee from DBS downgraded the rating on the stock to a Hold and gave it a $142.00 price target.
Zheng Feng Chee has given his Hold rating due to a combination of factors impacting PepsiCo’s financial outlook. The company’s recent performance showed net revenue and core EPS aligning with market expectations, driven primarily by price increases rather than volume growth. Despite a strong international segment, challenges in the North American market, particularly within the Frito-Lay business, have been noted, with volume recovery being slower than anticipated.
Additionally, the revised guidance for core EPS, which now predicts a decline due to cost pressures and uncertainties related to tariff policies, has contributed to a more cautious outlook. While PepsiCo is actively pursuing growth through product innovation and expansion into new categories, these efforts are expected to take time to yield significant results. The valuation has been adjusted to reflect these challenges, with a lower target price set, though the downside risk is somewhat mitigated by the company’s consistent dividend yield and potential for consumer sentiment improvement in the US.
In another report released on April 25, TD Cowen also maintained a Hold rating on the stock with a $143.00 price target.
PEP’s price has also changed moderately for the past six months – from $171.790 to $133.380, which is a -22.36% drop .