PepsiCo Stock Gets Upgrade, 'Successful Innovation And Expansion'

PepsiCo, Inc. PEP has reached only the mid-point of an investment cycle that is expected to result in sustainable top- and bottom-line growth, according to UBS.

The PepsiCo Analyst: Sean King upgraded the rating for PepsiCo from Neutral to Buy, while raising the price target from $145 to $165.

The PepsiCo Thesis: The current share price offers a good entry point, with the company benefiting from the “continued at-home consumption momentum and on-premise reopening,” King said in the upgrade note.

“PEP is a story of consistency and proven execution with category and geographical diversification. Successful innovation and expansion of PBNA margins could drive the next leg of earnings growth,” he added.

“Investments in beverage margins and global snacking scale support our above Street outlook for 2021-23E sales growth of +5.7% (St. +5.2%) and EPS growth of +10.0% (St. +7.2%),” the analyst wrote.

“We believe modest multiple expansion with consistent earnings upside and the opportunity for long-term algorithm improvement should offer 14% upside potential based on our 12-month price target,” King further mentioned in the note.

PEP Price Action: Shares of PepsiCo had risen by 0.71%% to $146.78 at the time of publication Wednesday morning.

(Photo: PepsiCo)