On Monday, Barclays reiterated its Overweight rating on Pepsico (NASDAQ:PEP), maintaining a $186.00 price target for the stock. The firm's analysis indicates that Pepsico may need to adjust its fiscal year 2024 organic sales guidance, which is currently projected at around 4%. The revision is anticipated due to persistent challenges in the US market and a less robust performance from international operations than seen earlier in the year.
The focus of investor discussions is expected to continue on Frito-Lay North America (FLNA) during tomorrow's earnings report. However, recent attention has also shifted to PepsiCo Beverages North America (PBNA) due to its noticeable lack of progress and potential setbacks. While forecasts for the fiscal year 2025 are not anticipated to be addressed by Pepsico at this time, investors are actively assessing potential risks to both revenue and profit margins for the next year.
Barclays has set expectations for Pepsico's profit growth in 2025 below the company's target algorithm, estimating an increase of 6.1%. This outlook is based on conversations with investors who are currently evaluating the factors that may influence the company's financial performance in the upcoming year.
In other recent news, PepsiCo has made significant strides in the food and beverage industry. The company has announced plans to acquire Garza Food Ventures and Siete Family Foods, each for $1.2 billion, as part of its strategy to diversify its product range and enhance its offerings in the food sector. RBC Capital, Barclays, and Jefferies have adjusted their price targets for PepsiCo due to modest revenue growth expectations and challenges in the U.S. market, while maintaining their respective ratings on the stock.
BofA Securities and Goldman Sachs have also revised their price targets for PepsiCo shares, primarily due to concerns about the company's performance in the North American market, but they continue to maintain their positive ratings for the company's stock. In compliance with recent U.S. Securities and Exchange Commission regulations, PepsiCo has made significant changes in its bylaws, including the adoption of the "universal proxy card" rules.
Finally, the company has issued Senior Notes totaling $2.25 billion for general corporate purposes and increased its quarterly dividend by 7% to $1.35 per share.
InvestingPro Insights
As Pepsico (NASDAQ:PEP) approaches its earnings report, InvestingPro data provides additional context to Barclays' analysis. The company's revenue growth has slowed to 2.13% over the last twelve months, with quarterly revenue growth at just 0.8% in Q2 2024. This aligns with Barclays' concerns about potential revisions to Pepsico's organic sales guidance.
Despite these challenges, Pepsico maintains impressive gross profit margins of 54.64%, supporting its position as a prominent player in the Beverages industry. This strength is reflected in an InvestingPro Tip highlighting the company's impressive gross profit margins.
Another InvestingPro Tip notes that Pepsico has raised its dividend for 51 consecutive years, demonstrating long-term financial stability. The current dividend yield stands at 3.23%, with a dividend growth rate of 7.11% over the last twelve months. This consistent dividend policy may provide some reassurance to investors amidst the current market uncertainties.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Pepsico, providing deeper insights into the company's financial health and market position.
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