Hedgeye Sees Strong Growth Potential for PepsiCo
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2h ago
0mins
Source: seekingalpha
- Growth Potential Analysis: Hedgeye has added PepsiCo (PEP) as a long idea, projecting over 30% upside by 2027 and 50% long-term, indicating strong market optimism regarding its future performance.
- Strategic Implementation Progress: PepsiCo has already implemented several Elliott-backed initiatives, including manufacturing rationalization, SKU reduction, and a heightened focus on free cash flow, which are expected to accelerate organic revenue growth and expand margins.
- Market Performance Observation: Despite secular snack tailwinds, PepsiCo has underperformed amid affordability pressures, health trends, and GLP-1 adoption; however, analysts suggest early signs of stabilization may be visible in Q4, supporting a potential performance inflection.
- Price Discount Advantage: PepsiCo's shares are trading at the widest discount to Coca-Cola (KO) in decades, reflected in a historically high dividend yield and low growth expectations, presenting an attractive entry point for investors.
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Analyst Views on PEP
Wall Street analysts forecast PEP stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for PEP is 161.90 USD with a low forecast of 144.00 USD and a high forecast of 172.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
12 Analyst Rating
6 Buy
6 Hold
0 Sell
Moderate Buy
Current: 153.630
Low
144.00
Averages
161.90
High
172.00
Current: 153.630
Low
144.00
Averages
161.90
High
172.00
About PEP
PepsiCo, Inc. is a global beverage and convenient food company. The Company’s segments include PepsiCo Foods North America (PFNA), PepsiCo Beverages North America (PBNA), International Beverages Franchise (IB Franchise), Europe, Middle East and Africa (EMEA), Latin America Foods (LatAm Foods), and Asia Pacific Foods. PFNA segment includes all of its convenient food businesses in the United States and Canada. PBNA segment includes all of its beverage businesses in the United States and Canada. IB Franchise segment includes its international franchise beverage businesses, as well as its SodaStream business. EMEA segment includes its convenient food businesses and beverage businesses with Company-owned bottlers in Europe, the Middle East and Africa. LatAm Foods segment includes all of its convenient food businesses in Latin America. Asia Pacific Foods segment consists of its convenient food businesses in Asia Pacific, including China, Australia and New Zealand, as well as India.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
PepsiCo Q4 Earnings Expectations and Dividend Insights
- Earnings Forecast: PepsiCo is set to release its Q4 earnings before the market opens on February 3, with analysts projecting earnings of $2.24 per share, reflecting a 14.3% increase from last year's $1.96, indicating sustained profitability improvements.
- Revenue Expectations: According to Benzinga Pro, PepsiCo's quarterly revenue is expected to reach $28.97 billion, up 4.3% from $27.78 billion last year, showcasing the company's robust market performance and sales growth.
- Analyst Ratings: UBS analyst Peter Grom maintained a 'Buy' rating on PepsiCo as of January 14, lowering the price target from $172 to $170, suggesting that despite the target reduction, analysts remain optimistic about the company's future performance.
- Dividend Yield: PepsiCo currently offers an annual dividend yield of 3.70%, with a quarterly dividend of $1.4225 per share; to achieve a monthly income of $500 from dividends, an investment of approximately $161,926 is required, highlighting the attractiveness of the company's dividend policy.
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Hedgeye Sees Strong Growth Potential for PepsiCo
- Growth Potential Analysis: Hedgeye has added PepsiCo (PEP) as a long idea, projecting over 30% upside by 2027 and 50% long-term, indicating strong market optimism regarding its future performance.
- Strategic Implementation Progress: PepsiCo has already implemented several Elliott-backed initiatives, including manufacturing rationalization, SKU reduction, and a heightened focus on free cash flow, which are expected to accelerate organic revenue growth and expand margins.
- Market Performance Observation: Despite secular snack tailwinds, PepsiCo has underperformed amid affordability pressures, health trends, and GLP-1 adoption; however, analysts suggest early signs of stabilization may be visible in Q4, supporting a potential performance inflection.
- Price Discount Advantage: PepsiCo's shares are trading at the widest discount to Coca-Cola (KO) in decades, reflected in a historically high dividend yield and low growth expectations, presenting an attractive entry point for investors.
Continue Reading