FMP

FMP

Enter

BofA Securities Lowers PepsiCo Price Target to $190, Cites Soft Demand and Volume Challenges

- (Last modified: Jul 9, 2024 4:05 AM)

twitterlinkedinfacebook
blog post cover photo

Image credit: FMP

BofA Securities analysts reduced their price target on PepsiCo (NASDAQ:PEP) to $190 from $210, while maintaining a Buy rating.

The analysts noted that the food and beverage industry continues to face weak demand as of mid-year, even after overcoming the "Snap-Lap" effect, fewer new price increases, and normalized marketing and promotions. This was highlighted by General Mills missing its Q4 North America sales target and delaying volume recovery.

Measured channel data indicates that PepsiCo's snacks and beverages volumes are underperforming. If this trend continues, PepsiCo may have to choose between striving to meet earnings targets or taking a step back to avoid exacerbating issues by cutting costs excessively. While this scenario is less likely for Q2, the probability increases later in the year. Historically, in similar situations (2004, 2012, and 2019), management has preferred to step back to ensure future progress.

The analysts lowered 2024 and 2025 EPS estimates from $8.15/$8.84 to $8.08/$8.54, representing 6% growth each year. This adjustment is driven by reducing the Q2 organic sales forecast to 2.5% and the 2024 estimate from 4.5% to 3.7%. Consequently, the price target was lowered to $190, with the multiple reduced from 24x to 22x. The new price target reflects current market conditions and assumes that multiples will revert to historical relative ranges as sales stabilize. However, the Buy rating is reiterated due to stable long-term earnings power despite the rerated multiples.

Other Blogs

May 14, 2024 11:41 AM - Sanzhi Kobzhan

The easiest way to calculate stock’s target price and why the target price is important.

A stock's target price, also known as its fair value, is an indication of what a share can cost based on the company’s forecasted financial statements. It is important to know a stock's fair value to find undervalued stocks with great growth potential. Let's consider how investment analysts calculat...

blog post title

May 16, 2024 8:06 PM - Gordon Thompson

Deutsche Bank Upgrades AST SpaceMobile to Buy Amid Legal Challenges

On Thursday, May 16, 2024, Deutsche Bank upgraded its rating on NASDAQ:ASTS to Buy, maintaining a hold position. At the time of the announcement, ASTS was trading at $4.03. This decision was accompanied by an increase in the price target for AST SpaceMobile, raised to $22 from $19, as detailed in a ...

blog post title

May 24, 2024 9:30 AM - Rajnish Katharotiya

How to Access and Analyze Earnings Call Transcripts

Earnings call transcripts are invaluable resources for investors, analysts, and financial enthusiasts. They provide insights into a company's performance, strategy, and future outlook, making them essential for making informed investment decisions. With Financial Modeling Prep, Earnings Call Transcr...

blog post title
FMP

FMP

Financial Modeling Prep API provides real time stock price, company financial statements, major index prices, stock historical data, forex real time rate and cryptocurrencies. Financial Modeling Prep stock price API is in real time, the company reports can be found in quarter or annual format, and goes back 30 years in history.
twitterlinkedinfacebookinstagram
2017-2024 © Financial Modeling Prep