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Why Most Wall Street Analysts Rate PepsiCo Stock a ‘Hold’

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Jan. 28 2019, Updated 7:30 a.m. ET

Current ratings

Leading snack food and beverage giant PepsiCo (PEP) currently has a “hold” rating from most analysts covering the stock. As of January 23, PepsiCo stock was rated a “hold” by 14 out of 23 analysts covering the consumer staples firm. Eight analysts had a “buy” recommendation while one analyst assigned a “sell” rating.

On December 13, UBS initiated coverage of PepsiCo (PEP) stock with a “neutral” rating and an initial price target of $123.

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On January 9, Goldman Sachs lowered its price target for PepsiCo stock to $107 from $109. As of January 23, the 12-month average price target for PepsiCo stock was $115.05. This price estimate reflects an upside potential of 3.9% over the next year. As of January 23, PepsiCo stock has risen just 0.2% since the start of this year.

Unlike its archrival, Coca-Cola, PepsiCo also has a strong presence in the snack food market in addition to the global beverage space. The consistent performance of PepsiCo’s Frito-Lay North America has been helping the company offset weakness in the beverage business, especially in the soda category.

New leadership

PepsiCo is now under the leadership of Ramon Laguarta, who succeeded long-time CEO Indra Nooyi effective October 3. Ramon Laguarta also succeeds Nooyi as chair of the company’s board of directors effective February 1, 2019.

PepsiCo has a vast packaged food and beverage portfolio that includes 22 brands—including Pepsi, Lay’s, and Gatorade, which generate over $1 billion in annual retail sales. Under the new leadership, PepsiCo will continue to invest in transforming its portfolio to include products with low or no sugar, low salt and saturated fats, and healthier ingredients.

We’ll compare the valuation for Coca-Cola and PepsiCo in the next part of this series.

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