Susquehanna Trims Estimates for PepsiCo, Inc. Ahead of Earnings

In a research report released today, Susquehanna analyst Pablo Zuanic reiterated a Neutral rating on shares of PepsiCo, Inc. (NYSE:PEP), while reducing the price target to $98 (from $100), as the company is scheduled to report its third-quarter earnings before the bell on Tuesday, October 6.

Zuanic wrote, “We are cutting our 3Q15 EPS estimate to $1.25 from $1.31 before, and are now 2c below consensus of $1.27. The scanner data points to decelerating trends in the US both for drinks and snacks (which we had not assumed before), and we estimate pricing gains in LatAm may be less than in recent quarters. Our FY15 and FY16 EPS estimates come down by 8c and 11c, respectively. We now use 12x EBITDA to value PEP (vs. 12.5x) to reflect the more uncertain climate as well as the lower average valuation multiple for the group. Our PT is now set for Dec’16, which on our CY17 estimates yields a price target of $98.”

“We think sentiment could be hurt if PEP does indeed report sequential sales growth deceleration (LFL) in the context of an easier comp yoy. PEP has consistently delivered 4-5% LFL sales growth, a feat that puts it at the high end of the peer F&B group,” the analyst added.

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Pablo Zuanic has a total average return of -5.7% and a 45.5% success rate. Zuanic has a 1.8% average return when recommending PEP, and is ranked #3157 out of 3764 analysts.

Out of the 15 analysts polled by TipRanks, 10 rate PepsiCo stock a Buy, while 5 rate the stock a Hold. With a return potential of 13.5%, the stock’s consensus target price stands at $106.86.

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