According to The Fly, Deutsche Bank lowered its view on PepsiCo, citing weaker visibility into a sustained improvement in the company’s North American foods business.
- PFNA reported flat volume and a 2% decline in organic revenue in the second quarter, following growth in both metrics during the first quarter.
- Deutsche Bank cited ‘mixed or fleeting benefits’ from PepsiCo’s initiatives and ongoing PFNA challenges, The Fly reported.
- Morningstar analyst Kristoffer Inton said last week that North American snack growth has stalled amid demand challenges and cost inflation.
PepsiCo Inc. (PEP) stock was in focus on Monday after Deutsche Bank downgraded the shares to ‘Hold’ from ‘Buy’ and lowered its price target to $138 from $155, citing weaker visibility into recovery in the company’s North American food business.
PEP shares were trading marginally lower in premarket trading at the time of writing as investors weighed the fresh analyst take against PepsiCo’s turnaround efforts and its upcoming third-quarter earnings report in October.
Deutsche Bank Cuts PepsiCo Rating
Deutsche Bank said it has less conviction in PepsiCo’s ability to deliver a ‘durable recovery’ in PepsiCo Foods North America (PFNA), according to The Fly.
The analyst said many of PepsiCo’s initiatives have produced ‘mixed or fleeting benefits,’ while the segment continues to face challenges in generating sustained improvement in consumption, organic growth, market share and operating leverage.
The firm also lowered its PepsiCo estimates, citing ‘lackluster’ North American consumption and escalating cost pressures, according to The Fly.
PepsiCo’s North America Turnaround In Focus
PepsiCo’s North American foods business reported flat volume and a 2% decline in organic revenue in the second quarter, after posting 2% organic volume growth and 1% organic revenue growth in the first quarter.
PepsiCo said after its second-quarter results that its North American business was softer than anticipated and that it expected a more gradual improvement in performance trends for the balance of 2026.
Morningstar analyst Kristoffer Inton said on Sept. 22 that growth had stalled over the past two years, citing sluggish performance in the North American snack business amid demand challenges and cost inflation.
PepsiCo has outlined affordability initiatives, product innovation, brand restaging and cost-reduction measures. The company has expanded offerings with protein, fiber and whole grains, introduced value-focused price tiers and said it was reducing nearly 20% of its U.S. food SKUs by early 2027.
Q3 Earnings Could Provide The Next Read
PepsiCo is scheduled to report its third-quarter 2026 results on Oct. 8. Analysts currently expect about $24.99 billion in revenue and $2.30 in adjusted earnings per share for the quarter, according to estimates from Fiscal AI.
PepsiCo Expands Colombia Investment
Separately, PepsiCo plans to invest $1 billion in Colombia over the next five years, Colombian President Abelardo De La Espriella said on Sunday. The investment will focus on expanding production, modernizing operations, and strengthening distribution in the country.
Retail View On PEP
On Stocktwits, retail sentiment around PEP remained in ‘Bullish’ territory over the past 24 hours, with message volume at ‘Normal’ levels.
PEP shares are down nearly 11% year to date.
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