PepsiCo (NASDAQ:PEP)
On Wednesday, PepsiCo (NASDAQ:PEP) reported its quarterly profits to the public, and the results were met with widespread praise from Wall Street analysts. As a result, Pepsi stock surged in the market today.
PepsiCo (NASDAQ:PEP) is headquartered in New York and reported third-quarter earnings before the market opened on Wednesday, above expectations thanks to a rise in snack sales and steady expansion in its main beverage division. The results were robust even though inflationary pressure and foreign currency effects were high. CEO Ramon Laguarta announced an increase of 2% in both EPS and sales projections in light of the positive surprise.
Strong earnings raised confidence on Wall Street, where analysts had previously been generally optimistic about the company.
Such financial institutions as Evercore ISI, Bank of America, and Morgan Stanley have all praised the firm for its pricing power in the face of persistent inflation.
We reaffirm our Buy rating and $190 price target on Pepsi stock following the clean beat as stronger price/mix with modestly worse volume bodes well,” Bryan Spillane, an analyst at Bank of America, said to clients on Wednesday. According to our research, Pepsi stock improved market position and pricing power justify the 22.9x premium they charge compared to its non-alcoholic beverage peer average.
Seeking Alpha writer Justin Purohit echoed this sentiment, noting that the beverage industry in Latin America is particularly robust “thanks to efficient net pricing and continuous volume growth.”
According to Poruhit, PepsiCo (NASDAQ:PEP) success shows how much people like its tasty snacks and drinks, which are both handy and inexpensive compared to other discretionary expenditures. New investors may find better returns elsewhere, but Pepsi stock is still a solid investment for the long run.
Dara Mohsenian, an analyst at Morgan Stanley, also recommended the Pepsi stock as a substantial investment. He advised clients that “topline momentum is continuing based on excellent US/European scanner data,” making even the higher guidance “appear modest,” and maintained a Buy-equivalent rating and $198 price target. One further plus, he said, is that a significant initiative to return capital to shareholders has been kept going.
According to Mohsenian, “PepsiCo (NASDAQ:PEP) remains our favorite mega-cap selection here graded OW,” adding the company’s performance in the third quarter “provides more evidence of extreme Pepsi pricing power and little demand elasticity” and that the company is “morphing into a higher growth topline compounder longer-term and justifying a higher multiple.”
Third Bridge analyst Shoggi M. Ezeizat, who specializes in the consumer sector, cautioned that supply chain restrictions might limit the market’s potential for future growth.
In fact, “supply shortages are the greatest barrier,” Ezeizat said, preventing Pepsi stock from increasing its multipack offerings. Our experts have concluded that SKU rationalizations are essential for maintaining consistent supply and assuring merchants that they need not worry about empty shelves despite the anticipated increase in demand over the coming months.
The Lay’s brand, Ezeizat noted, is “the most vulnerable to private label products’ risk” as consumers make cuts.
Pepsi stock was the top performer among consumer staples companies on Wednesday, gaining 4.03%.
Meta Description
Wall Street has heaped praise on Pepsi stock after the company reported record profits and raised its profit outlook.
Featured Image – Megapixl © Jetcityimage
Author Shariq Khan 
