Analyst Kaumil Gajrawala of Jefferies maintained a Hold rating on PepsiCo (PEP – Research Report), retaining the price target of $170.00.
Kaumil Gajrawala has given his Hold rating due to a combination of factors surrounding PepsiCo’s recent acquisition of poppi. While the acquisition aligns with PepsiCo’s strategy of expanding into the fast-growing modern soda market, the deal’s high valuation and uncertain profitability raise some concerns. The acquisition is seen as a positive move to revamp PepsiCo’s portfolio, but the lack of clarity on how accretive the deal will be leaves some uncertainty.
Additionally, the acquisition reduces the likelihood of a buyout of Celsius, which might have been a more straightforward growth opportunity. Although the acquisition is expected to refresh PepsiCo’s North American beverage business, ongoing struggles in other segments, such as the Frito business, contribute to the Hold rating. The valuation of PepsiCo shares at $170, based on future earnings projections, also supports the decision to maintain a neutral stance.
In another report released on March 7, RBC Capital also maintained a Hold rating on the stock with a $163.00 price target.
Based on the recent corporate insider activity of 30 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.