Why 3 Pepsi Analysts Are Raising Price Targets After Q3 Earnings

PepsiCo, Inc. PEP reported third-quarter results Wednesday that were ahead of expectations and raised its outlook for the full year.

The company’s sales grew 8.8% year-over-year to $21.97 billion, topping the consensus estimate of $20.81 billion, while core earnings grew 10.05% to $1.97 per share, exceeding expectations of $1.84 per share.

Here's what the Street has to say about the beverage giant's quarterly print. 

Wells Fargo On PepsiCo

Analyst Gary Mobley maintained an Equal Weight rating while raising the price target from $172 to $174.

“Q322 was marked by +16% organic sales growth, driven by pricing +17% but nevertheless with just -1% volume impact as elasticities remain low,” Mobley said in a note.

“2022 seems a wrap with a doable Q4, with the PEP story now firmly on 2023, in our view.” 

In 2023, the company will still face commodity, currency and inflation headwinds, but much less than in 2022 and “will need to slow the rate of SG&A increases relative to recent years,” he said.

PepsiCo has “its hands firmly on the wheel of its own destiny here,” Mobley said. 

Check out other analyst stock ratings.

RBC Capital Markets On PepsiCo

Analyst Nik Modi reiterated a Sector Perform rating while raising the price target from $165 to $170.

PepsiCo’s results are “highlighting strong topline momentum with solid price realization and better elasticities,” Modi wrote in a note.

“Guidance implies Q4 deceleration with worsening elasticities (which we see as appropriate given the macro uncertainty),” he added.

Wedbush On PepsiCo

Analyst Gerald Pascarelli maintained an Outperform rating while raising the price target from $185 to $190.

“While read throughs had indicated that it was likely going to be another strong, price-led quarter, the performance and outlook came in better than anticipated which was clearly reflected in the stock price performance,” Pascarelli said.

“While guidance implies that trends will slow sequentially in 4Q, the company has put itself in a position to deliver its second consecutive year of above algorithm, double-digit local currency EPS growth,” the analyst said. 

PEP Price Action: Shares of PepsiCo were down 1.04% at $167.62 Thursday morning. 

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