Susquehanna Upgrades Pepsico (PEP) to Positive Citing M&A Potential

(Updated - April 12, 2017 9:13 AM EDT)

Susquehanna upgraded Pepsico (NYSE: PEP) from Neutral to Positive with a price target of $132.00 (from $118.00).

Analyst Pablo Zuanic believes a Kraft Heinz (NASDAQ: KHC) offer may be in the mix following the Unilever plc (NYSE: UL) rebuff for either Pepsi or Mondelez (NASDAQ: MDLZ) commenting "KHC needs to do another deal". He sees strategic merits in a Kraft Heinz PEP deal in a joint bid with Anheuser-Busch (NYSE: BUD).

He reminds clients in a morning note that Pepsi trades at a 25 percent discount to Coca-Cola (NYSE: KO).

He believes Pepsi continues to struggle noting, among other events, the most recent error with the Kendall Jenner commercial.

To be clear, he tells clients straight out that the Unilever rebuff of KHC is a key factor in his morning upgrade of Pepsi.

Zuanic's CY 2017 EPS estimate falls from $5.16 to $5.09.

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 $111.73 yesterday.

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