PEP Surges 3.07% Amid Strategic Overhaul and Analyst Hype: What's Fueling the Rally?

Summary
• JPMorgan upgrades PEP to Overweight with $164 price target
• PepsiCo cuts 20% of U.S. SKUs to streamline operations
• Stock jumps 3.07% to $149.08, trading near 52W high of $160.15
• Sector peers like Coca-Cola (KO) remain flat at $70.08

PepsiCo’s stock is surging on a perfect storm of strategic overhauls, activist investor pressure, and analyst optimism. The stock has clawed back 3.07% to $149.08, trading within 7% of its 52-week high, as JPMorgan’s upgrade and cost-cutting measures spark renewed investor interest. With the Packaged Foods sector in flux and peers like Coca-Cola lagging, PEP’s aggressive productivity targets and product rationalization are reshaping its trajectory.

Strategic Overhaul and Analyst Hype Drive PEP’s Rally
PepsiCo’s 3.07% intraday surge is fueled by a confluence of strategic and analytical catalysts. JPMorgan’s upgrade to Overweight—backed by a $164 price target—highlights the firm’s confidence in PepsiCo’s accelerated innovation and productivity agenda. Simultaneously, the company’s decision to eliminate 20% of U.S. SKUs, close three plants, and introduce affordability initiatives has signaled a sharp focus on margin expansion. These moves align with activist investor Elliott’s demands for cost discipline, which have already spurred tangible actions like the removal of artificial colors and streamlined operations. The stock’s momentum is further amplified by improving consumption trends in U.S. snacking and early success in affordability programs, as noted by JPMorgan’s Andrea Teixeira.

Packaged Foods Sector Volatility as PEP Outperforms MDLZ
The Packaged Foods sector is in a state of flux, with PepsiCo’s 3.07% rally starkly contrasting Mondelēz International’s (MDLZ) -0.95% decline. While sector peers like Coca-Cola (KO) remain flat, PEP’s strategic overhauls and activist-driven reforms are creating a divergence. The sector’s broader challenges—ranging from regulatory scrutiny of ultraprocessed foods to shifting consumer preferences—highlight the importance of PepsiCo’s SKU rationalization and affordability initiatives. By prioritizing core brands and cutting underperforming products, PEP is positioning itself to outperform peers in a market where margin discipline and innovation are paramount.

Options Playbook: Leverage PEP’s Bullish Momentum with Gamma-Driven Contracts
• 200-day average: 142.28 (below current price)
• RSI: 35.07 (oversold)
• MACD: -0.066 (bearish), Signal Line: 0.183
• Bollinger Bands: 143.52 (lower), 149.80 (upper)
• 30D Support/Resistance: 146.02–146.19

PepsiCo’s technicals suggest a short-term bullish setup, with the stock trading near its upper Bollinger Band and RSI in oversold territory. The 200-day average at 142.28 provides a critical support level, while the 30D support at 146.02 offers a near-term floor. For options traders, the key is to capitalize on the stock’s volatility and gamma-driven contracts. Two top picks from the options chain stand out:

• PEP20251219C148
- Type: Call
- Strike Price: $148
- Expiration: 2025-12-19
- IV: 22.09% (moderate)
- Leverage Ratio: 52.01% (high)
- Delta: 0.60 (moderate sensitivity)
- Theta: -0.125 (rapid time decay)
- Gamma: 0.0707 (high sensitivity to price moves)
- Turnover: 52,429 (liquid)
- Payoff (5% upside): $1.45 per contract
- Why it stands out: High leverage and gamma make this contract ideal for a short-term rally, with liquid turnover ensuring easy entry/exit.

• PEP20251219C149
- Type: Call
- Strike Price: $149
- Expiration: 2025-12-19
- IV: 21.37% (moderate)
- Leverage Ratio: 66.34% (very high)
- Delta: 0.528 (moderate sensitivity)
- Theta: -0.124 (rapid time decay)
- Gamma: 0.0753 (high sensitivity to price moves)
- Turnover: 17,910 (liquid)
- Payoff (5% upside): $1.45 per contract
- Why it stands out: The highest leverage ratio among the chain, this contract offers explosive potential if PEP breaks above $149.53, its intraday high.

Action Alert: Aggressive bulls should target PEP20251219C149 into a break above $149.53. If the stock consolidates near $146.66 (middle Bollinger Band), PEP20251219C148 offers a safer, gamma-driven play.

Backtest Pepsico Stock Performance
The backtest of the Performance of the ETF PEP (iShares Core S&P 500 ETF) after a 3% intraday surge from 2022 to now shows mixed results. The 3-day win rate is 49.69%, the 10-day win rate is 46.12%, and the 30-day win rate is 46.75%. However, the ETF experienced a slight decline, with a maximum return of -0.04% over the 30-day period, indicating that while there is a decent probability of positive returns in the short term, long-term performance is lackluster.

PEP’s Strategic Rebirth: A Bull Case for 2026
PepsiCo’s 3.07% rally is not a flash in the pan—it’s a strategic repositioning driven by activist pressure, cost discipline, and analyst optimism. With JPMorgan’s $164 price target and a 52W high of $160.15 within reach, the stock is primed for a sustained move higher. Investors should monitor the 146.02 support level and watch for a breakout above $149.53 to confirm the bullish thesis. Meanwhile, Mondelēz International’s -0.95% decline underscores the importance of PepsiCo’s agility in a sector facing regulatory and consumer headwinds. For those with a 2026 horizon, PEP’s productivity-driven margin expansion and product innovation make it a compelling long-term play.