On Thursday, Barclays adjusted its stance on Pepsico (NASDAQ:PEP) by setting a new price target. The firm now has a target of $186.00 for the beverage and snack giant, a slight decrease from the previous $187.00 target, while retaining an Overweight rating on the stock.
The adjustment comes amid expectations that Pepsico will likely revise its fiscal year 2024 organic sales forecast. The current outlook of approximately 4% growth is challenged by a persistently difficult U.S. market and a less significant contribution from international operations than earlier in the year.
The company's Frito-Lay North America (FLNA) division is anticipated to be a focal point in the upcoming earnings report. However, recent attention has also shifted to Pepsico Beverages North America (PBNA) due to its notable lack of progress and potential setbacks.
While Pepsico has not yet provided insights into its 2025 projections, there is a sense among investors that they are actively assessing potential risks to both revenue and profit margins for the next year. Barclays' current expectations are set for below-trend profit growth in 2025, estimating an increase of 6.1%.
InvestingPro Insights
PepsiCo's financial metrics and market position offer additional context to Barclays' recent price target adjustment. According to InvestingPro data, PepsiCo boasts a market capitalization of $232.89 billion and a P/E ratio of 24.4, indicating investors' willingness to pay a premium for its shares. The company's revenue for the last twelve months stands at an impressive $92.05 billion, with a gross profit margin of 54.64%, underscoring its strong market position and operational efficiency.
InvestingPro Tips highlight PepsiCo's consistent dividend performance, having raised its dividend for 51 consecutive years. This track record aligns with the company's stable financial position, despite Barclays' slight reduction in price target. Additionally, PepsiCo's stock generally trades with low price volatility, which may provide some reassurance to investors in light of the challenging U.S. market conditions mentioned in the article.
It's worth noting that while Barclays maintains an Overweight rating, InvestingPro Tips indicate that 6 analysts have revised their earnings downwards for the upcoming period. This could be related to the expected revision of PepsiCo's fiscal year 2024 organic sales forecast discussed in the article.
For readers interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for PepsiCo, providing a deeper understanding of the company's financial health and market position.
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