Analysts Remain Positive on PepsiCo (PEP) After Reporting Beat-and-raise Q3

October 6, 2021 6:07 AM EDT
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Price: $161.64 +0.64%

Rating Summary:
    15 Buy, 12 Hold, 1 Sell

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Today's Overall Ratings:
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PepsiCo (NASDAQ: PEP) yesterday reported better-than-expected Q3 results and raised its full-year outlook.

The company said it earned $1.79 per share to top the analyst estimate of $1.73. Revenue for the quarter came in at $20.19 billion versus the consensus estimate of $19.39 billion.

On the guidance front, PEP now expects FY EPS of “at least” $6.20, which is lower than the analyst consensus of $6.24.

“For fiscal year 2021, the Company now expects to deliver approximately 8 percent organic revenue growth (versus our previous guidance of 6 percent), at least 11 percent core constant currency EPS growth (versus our previous guidance of 11 percent), and at least 12 percent core EPS growth (versus our previous guidance of 12 percent),” the company said in a statement.

Cowen analyst Vivien Azer maintained an Outperform rating and a $185.00 per share price target on “another strong revenue quarter.”

“In light of today's print, we are holding our FY21 EPS constant at $6.20 and lowering our FY22 EPS to $6.62, which implies just under 7% growth. We would note that our estimates do not assume any share repurchases for FY22, which has historically been embedded in PEP's growth algorithm and we believe provides upside to estimates should the company implement buybacks earlier than we are anticipating. We are also expecting FX to be a more meaningful 90 bps headwind to FY22 EPS (from 20 bps previously),” Azer said in a client note.

Similarly, Guggenheim’s Laurent Grandet also maintained the $175.00 price target on the Buy-rated PEP stock.

“PepsiCo reported a strong 3Q with organic growth of 9%, and management raised its guidance that now implies an ever stronger 4Q top line than we were previously modeling. CEO Ramon Laguarta continues to prove his willingness and ability to aggressively reshape the PepsiCo portfolio to drive incremental growth and profit. We remain BUY on PepsiCo shares as the company continues to improve its execution with potential additional earnings upside this year – our FY21 EPS is above guidance and consensus – as we expect continued rationality in the US carbonated category,” Grandet wrote in a note sent to clients.

The PEP stock price closed at $151.09 yesterday.

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