Morgan Stanley Reiterates Overweight Rating On Top Pick PEP

Morgan Stanley is reiterating its Overweight rating and maintaining its $82 price target on PepsiCo Inc PEP as it remains very high on the stock. Says Morgan Stanley, in its report, “We are reiterating our Overweight rating on Pepsi, which is our top pick and on Morgan Stanley's Best Ideas List, given we view 2011 EPS visibility as high and valuation as attractive. We also think reinvestment behind the business this year will set the stage for high-single-digit (%) LT EPS growth beyond 2011, which is towards the high end of large-cap staples peers. Our $82 price target is based on a 16.5 times 2012 P/E multiple, which is in-line with PEP's five-yr. historical avg., and offers compelling 20% upside in the stock when combined with a 3% dividend yield.” PEP closed at $70.03 yesterday.