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Morgan Stanley Downgrades Pepsico (PEP) to Equalweight

September 20, 2024 4:05 AM EDT
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Price: $165.11 +0.68%

Rating Summary:
    14 Buy, 18 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 28 | Down: 33 | New: 12
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Morgan Stanley analyst Dara Mohsenian downgraded Pepsico (NASDAQ: PEP) from Overweight to Equalweight with a price target of $185.00.

The analyst comments: "We are downgrading PEP to Equal-weight from Overweight, and lowering our OSG/EPS estimates further below consensus, albeit with some downside already expected by the market. We upgraded the stock to Overweight back in March at what we thought was a good entry point, expecting OSG would inflect in H2 as Pepsi cycled easier comparisons, Quaker recall issues dissipated, and PEP's pricing power would reemerge on a relative basis vs HPC peers. This potential OSG inflection was on top of an attractive valuation that had reached a modern day relative low. However, that fundamental call was wrong, as FLNA OSG weakness has lingered, price interventions/higher spend do not seem to be driving a meaningful snacks topline payback, and beverage market share trends have worsened, along with moderating, albeit still solid international OSG as pricing contribution slows sequentially. Pepsi's stock is up nearly 10% off its bottom, but that is in-line with a similar run-up in defensive large-cap peers (consistent with our strategists view), and PEP's relative NTM P/E valuation is still ~2.5 standard deviations below its 5-yr relative average vs large-cap peers."

For an analyst ratings summary and ratings history on Pepsico click here. For more ratings news on Pepsico click here.

Shares of Pepsico closed at $174.66 yesterday.



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