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Will PepsiCo Deliver Strong 1Q17 Earnings?

PART:
1 2 3 4 5
Part 4
Will PepsiCo Deliver Strong 1Q17 Earnings? PART 4 OF 5

PepsiCo Stock: What Analysts Say ahead of 1Q17 Results

Analysts’ ratings

As of April 19, 73.0% or 16 out of 22 analysts have a “buy” rating for PepsiCo’s (PEP) stock. Six analysts have a “hold” rating for PepsiCo. None of the analysts currently have a “sell” recommendation. On April 12, Susquehanna raised its rating for PepsiCo stock to “positive” from “neutral”. Susquehanna also raised its price target for PepsiCo stock to $132 from $118.

PepsiCo Stock: What Analysts Say ahead of 1Q17 Results

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Consensus “buy” rating

The majority of analysts currently have a “buy” rating for PepsiCo stock, given the company’s strong snack food and beverage portfolio. The company’s extensive product portfolio also comprises 22 iconic brands like Pepsi, Aquafina, and Lay’s, each of which generates over $1 billion in annual retail sales.

However, the company is currently under pressure due to currency headwinds. PepsiCo sells its products in over 200 countries and derived 42% of its net revenue from its international operations in 2016. Rival Coca-Cola (KO) generated about 52.0% of its 2016 revenue from its international operations and is also facing significant currency headwinds.

Aside from currency fluctuations, PepsiCo’s performance is also being impacted by the shift in consumer preference to healthier snack and beverage items. As we discussed in Part 2 of this series, the company is now focusing its resources on the innovation of better snack food and beverage products.

12-month price target

As of April 19, the 12-month price target for PepsiCo stock is $119.47. This price target reflects an upside potential of 5.2%.

As we mentioned in Part 1 of this series, PepsiCo’s stock has risen 8.6% on a YTD basis. The company’s upcoming results might result in a revision to its average 12-month price target.

We’ll discuss PepsiCo’s valuation in the final part of this series.

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