PepsiCo Facing 'Building Risk' to Fiscal 2027 EPS, Morgan Stanley Says

MT Newswires Live07-10 22:23

PepsiCo (PEP) is facing "building risk" to its fiscal 2027 earnings per share, with the company pointing towards the lower end of its fiscal 2026 EPS guidance, Morgan Stanley said in a Friday note.

The company reported fiscal Q2 core earnings of $2.20 per diluted share, up from $2.12 a year earlier, as net revenue increased to $24.18 billion from $22.73 billion. For fiscal 2026, PepsiCo continues to expect core constant-currency EPS to rise 4% to 6%.

Morgan Stanley said PepsiCo's implied fiscal Q4 EPS growth outlook of 8% seems "aggressive" given a tougher year-on-year comparison, continued weakness in North America, and potentially higher costs in H2.

"We worry that PEP will need to reset EPS in 2027," Morgan Stanley analysts said, adding that the company might need to increase investments to drive organic sales growth in North America.

Morgan Stanley lowered its fiscal 2026 and 2027 EPS estimates for the PepsiCo by 3% and 6%, respectively, according to the note.

Morgan Stanley cut its price target on PepsiCo to $160 from $180, with an equal-weight rating.

Price: 137.57, Change: -0.29, Percent Change: -0.21

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