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Wall Street Analysts Weigh In On Pepsi's Q1 Earnings

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PepsiCo, Inc. PEP 1.42% started 2016 with a beat on first quarter earnings, and reiterated its outlook for the current year. Accordingly, the company expects about 4 percent organic revenue growth, and expects core earnings of $4.66 a share for the same period. Analysts predict the company to earn $4.70 a share on revenue of $62.88 billion for the year 2016.

Looking ahead, the company said while the U.S. economy is indeed recovering, the macro environment remains both volatile and difficult in each of Latin America, Asia and the Middle East.

However, John Faucher of JPMorgan raised the price target on the stock by $2 to $112, while keeping the Overweight rating on the stock on solid underlying results, strong yield, and cheaper relative valuation.

Morgan Stanley noted the quarterly results offer more evidence that Pepsi are superior to food peers. The brokerage kept its $119 price target unchanged.

"We rate PEP Overweight, as we expect its valuation discount vs. peers to close with superior PEP topline and EPS growth, as well as greater activist potential," analyst Dara Mohsenian noted.

Meanwhile, Bernstein rates Pepsi Outperform and $115 price target as it continues to believe that challenges in the company's beverages business will reduce on pricing rationality in the marketplace, and steady strength in Snacks/Food.

Bill Schmitz of Deutsche Bank also maintained his Buy rating and $115 price target on shares, saying the "company has built a better mouse trap with ample flexibility throughout the P&L to manage macro and geopolitical volatility."

Goldman Sachs remain Neutral rated on Pepsi, saying that though it sees limited downside to EPS but also see limited upside to valuation and catalysts. The brokerage raised the price target to $105 from $103.

"..given productivity savings, a still-benign commodity backdrop, improving FX and the 53rd week, we believe PEP has ample flexibility to meet/beat its guidance this year," analyst Judy Hong wrote in a note.

Citi, which also has a Neutral rating, raised its price target to $110 from $102. Analyst Wendy Nicholson is of the view that the company's quarterly results showed improved volume growth while price/mix had less of an impact.

DateFirmActionFromTo
Apr 2016BarclaysMaintainsOverweight
Apr 2016JP MorganMaintainsOverweight
Apr 2016CitigroupMaintainsNeutral

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