PepsiCo Shares Struggle Amid Market Challenges and Analyst Downgrades

PepsiCo, Inc. (PEP) holds a significant market cap of $180.9 billion, establishing itself as a leading player in the food and beverage sector. Based in Purchase, New York, the company operates across over 200 countries and territories, boasting a diverse portfolio of well-known brands.

Performance Overview

Over the past 52 weeks, PepsiCo’s stock has underperformed against the broader market. PEP shares have declined 25.9%, while the S&P 500 Index ($SPX) has increased by 9.2% during the same period. Additionally, year-to-date (YTD) performance shows PEP down 13.6%, compared to SPX’s 3.7% drop.

In a close examination, PEP’s decline also compares unfavorably to the Nasdaq Food & Beverage ETF (FTXG), which has experienced an 8% drop over the past year and a 1.3% decrease YTD.

Stock Trends and Market Factors

On May 6, PEP shares hit a 52-week low of $130.16, representing a significant 28.7% decline from the 52-week high of $183.41. The stock’s challenges this year stem from weak consumer demand, product recalls within the Quaker Foods North America segment, and pressures from recent tariffs.

Looking ahead, analysts project a 3.3% year-over-year growth in PEP’s earnings per share (EPS) to $7.89 for the current fiscal year, which ends in December. However, the company’s earnings surprise history is variable, having exceeded consensus estimates in three of the last four quarters.

Analyst Ratings and Price Targets

Among the 20 analysts evaluating PEP, the consensus rating stands at “Moderate Buy.” This rating reflects seven “Strong Buy” recommendations, 12 “Holds,” and one “Strong Sell.” In recent weeks, the configuration has grown less favorable, with only eight analysts advocating a “Strong Buy.”

Morgan Stanley (MS) analyst Dara Mohsenian recently lowered PepsiCo’s price target from $168 to $153 while retaining an “Equal Weight” rating. This adjustment followed disappointing first-quarter results, including a 4% decline in volumes for the high-margin Frito-Lay North America segment and an 8% year-over-year drop in EPS. The firm cited ongoing difficulties in U.S. organic sales growth and issues in the snack category and beverage market share.

Currently, the average price target of $150.47 indicates a potential upside of 14.5% from PEP’s current levels. The highest price target of $172 suggests a possible increase of 30.9% from the current stock price.

On the date of publication, Kritika Sarmah had no positions in any of the securities mentioned in this article. All information and data are provided for informational purposes. For more information, please view the relevant disclosure policy here.

More news from Barchart

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.