PepsiCo's Target Price Cut to $145 by BofA Ahead of Q2 Earnings Report

Bank of America has cut its target price for PepsiCo (PEP) to $145 from $150, maintaining a Neutral rating ahead of Q2 earnings. The revision reflects expected sales deceleration in North America. Analysts forecast an average target price of $148.11, implying an 8.84% upside from the current price of $136.08. The estimated GF Value for PepsiCo in one year is $180.74, suggesting a 32.82% upside.

Bank of America (BofA) has reduced its target price for PepsiCo (PEP) to $145 from $150, while maintaining a Neutral rating ahead of the company's second-quarter earnings report scheduled for July 17 [1]. This adjustment reflects the firm's expectation of a deceleration in sales, particularly in PepsiCo's North American food and beverage divisions [1].

The reduction in the price target comes as PepsiCo faces challenges in its North American market, where analysts have revised their earnings estimates downward for the upcoming period [1]. BofA's analysis indicates potential sensitivity to operating profit at PepsiCo's North American food division, although this is not incorporated into its revised estimate [1].

PepsiCo's current market value stands at $186.58 billion, with impressive gross profit margins of 55.07% despite market challenges [1]. The company's annual revenue for 2024 was $91.52 billion, and it has a strong track record of dividend payments [1]. The recent acquisition of the prebiotic soda brand poppi for $1.95 billion, including anticipated cash tax benefits, signals a strategic move towards health-focused products [1].

Analysts have forecasted an average target price of $148.11 for PepsiCo, with a high estimate of $169.00 and a low estimate of $110.00, suggesting an 8.84% upside from the current price of $136.08 [2]. The estimated GF Value for PepsiCo in one year is $180.74, indicating a 32.82% upside [2].

Investors should monitor PepsiCo's ability to navigate local challenges in North America while leveraging growth opportunities in international markets. The company's recent dividend increase, a 5% quarterly increase to $1.4225 per share, reflects its commitment to delivering shareholder value [1].

References:
[1] https://www.investing.com/news/analyst-ratings/bofa-securities-lowers-pepsico-stock-price-target-to-145-on-north-america-concerns-93CH-4131722
[2] https://www.gurufocus.com/news/2971584/pepsico-pep-target-price-cut-by-bofa-ahead-of-earnings-report-pep-stock-news