Pepsico Seen As Undervalued By Jefferies

PepsiCo, Inc. PEP announced it's moving back to its old formula of Diet Pepsi that includes artificial sweetner and controversial ingredient Aspartame. Just last year, Pepsi decided to take out the potentially cancer causing ingredient aspartame out of its Diet Pepsi products, replacing it with Sucralose.

As soda sales have continued to struggle industry wide, the move alienated loyal diet Pepsi fans, as Pepsi saw a sales slump after it took the artificial sweetener out. Sales of Pepsico's diet products are down 8.5 percent year-to-date.

Related Link: Diet Pepsi Drinkers Want Their Artificial Sweetener Back, Regardless Of Cancer Concerns

The move by Pepsi was initially made to get some good publicity over Coca Cola, who decided to leave aspartame in their Diet Coke products. This new Diet Pepsi with Aspartame is set to hit stores in September.

As consumers become more health conscience, soda sales have been feeling the hit, with bottled water closing the gap and could soon surpass soda in U.S. consumption. A recent analyst note by Jefferies sees Pepsico as undervalued.

The analysts wrote, "US diet risk is manageable and PEP's shares remain undervalued with its bevs biz trading at an implied ~9.5x EV/EBITDA multiple."

Jefferies maintains a Buy rating for Pepsico.