PepsiCo Lowers Organic Sales Growth Forecast, Citi Upgrades Stock Rating
PepsiCo, the global beverage company, recently adjusted its organic sales growth forecast in its fourth-quarter financial report. In response, Citi analysts have upgraded PepsiCo’s stock rating from Neutral to Buy and raised their price target on shares to $195 from $180.
According to Citi analysts, PepsiCo is on track to meet its financial forecasts, which has led to their positive rating upgrade. The shares have been the subject of intense debate in recent months, particularly after the company’s optimistic projections for 2024 in its third quarter financial report. The market had expected these projections to be revised downward.
The anticipated revision did indeed materialize in the fourth quarter, with PepsiCo lowering its organic sales growth target to “at-least 4%,” down from the previous range of +4-6%. However, analysts at Citi believe that this adjustment actually works in PepsiCo’s favor. With a more achievable sales growth target, market expectations have reset, making the company’s outlook more favorable.
While volumes are expected to face pressure in the first half of the year, analysts note that rival company Coca-Cola is likely to post stronger results. However, these factors have already been taken into consideration and factored into PepsiCo’s stock price. As a result, investors could potentially reap the benefits if PepsiCo’s products perform better than expected and fly off the shelves.
Overall, Citi’s upgraded rating and increased price target reflect their confidence in PepsiCo’s ability to meet or exceed its guidance.
Analyst comment
Positive news. PepsiCo’s decision to lower its organic sales growth forecast has been seen as a positive move by analysts at Citi. They believe that the more achievable sales growth target will reset market expectations, making the company’s outlook more favorable. Despite the expected pressure on volumes in the first half of the year and stronger results from rival Coca-Cola, investors could potentially benefit if PepsiCo’s products perform better than expected. Citi’s upgraded rating and increased price target reflect their confidence in PepsiCo’s ability to meet or exceed its guidance.
