PepsiCo (NASDAQ:PEP) received a downgrade from Overweight to Equalweight by Barclays analysts, who lowered the price target to $156 from $168, citing near-term headwinds in the company’s Frito-Lay North America (FLNA) division.
As the market increasingly views PepsiCo as more of a U.S. food company, investor sentiment is closely tied to FLNA’s volume recovery. Barclays anticipates that it may take several more quarters before trends stabilize, particularly amid a more uncertain macroeconomic environment.
Despite the short-term struggles, the firm still sees FLNA capable of achieving sustainable volume growth of approximately 1.5% and organic sales growth (OSG) of around 3% over the long run. Beyond this division’s recovery, Barclays believes PepsiCo’s sales growth of 4-6% and profit growth of 7-9% remains achievable over the long term—though likely at the lower end of that range.
PepsiCo’s current valuation in the high-teens multiple reflects a balanced risk-reward outlook, according to Barclays. While FLNA’s near-term softness adds caution, the company’s strong international business and productivity initiatives help mitigate downside risk, supporting a baseline of 4% sales growth and 7% EPS growth in the long run.
At CWEB, we are always looking to expand our network of strategic investors and partners. If you're interested in exploring investment opportunities or discussing potential partnerships and serious inquiries. Contact: jacque@cweb.com