Goldman Sachs Sees 19% Upside In PepsiCo (PEP), Citing Turnaround Progress

Goldman Sachs raised its price target on Pepsico (NYSE: PEP) from $77 to $83 and reiterated their Buy rating following solid results from the company yesterday. The price targets suggests 19% upside.

The firm maintained 2011 EPS estimates of $4.54 and tweaked down 2012/2013 EPS to $5.00/$5.50 from $5.02/$5.55 on modestly higher costs for FLNA.

"We reiterate our Buy rating on PEP shares as we believe fundamental mprovement increases our confidence in the potential for P/E expansion," the firm stated.

The firm said fundamentals are gradually turning the corner. In addition, multiple earnings levers should support solid EPS growth and they see 10% EPS growth this year.

Goldman sees Pepsi's valuation beginning to re-rate to historical norms, or a 20% premium to the S&P 500. Currently shares are attractive at 14x 2012 EPS, the low end of large cap staples peers.

For more ratings news on Pepsico click here and for the rating history of Pepsico click here.

Shares of Pepsico closed at $69.72 yesterday.

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