JPMorgan expects PepsiCo to lean more heavily on productivity in the fourth quarter to deliver its earnings guidance.
- JPMorgan cited weaker-than-expected North American trends and a stalled Frito-Lay recovery, according to TheFly.
- PepsiCo plans low-to mid-single-digit price increases on select chips and some sodas by late 2026 or early 2027.
- Several analysts have recently lowered their PepsiCo price targets ahead of the company’s Oct. 8 third-quarter earnings report.
PepsiCo Inc. (PEP) stock was in focus Tuesday after JPMorgan downgraded the shares to ‘Neutral’ from ‘Overweight’ and cut its price target to $138 from $170, according to TheFly.
JPMorgan said tracked channel data and recent price-increase announcements suggest PepsiCo’s North American trends have likely continued to underperform management expectations, The Fly reported.
JPMorgan Flags Frito-Lay Weakness
JPMorgan said Frito-Lay North America’s salty-snacks performance has remained lackluster, with the recovery stalling following the first quarter, according to TheFly.
The firm expects PepsiCo to lean more heavily on productivity in the fourth quarter to deliver its earnings guidance. JPMorgan also expects PepsiCo Foods North America trends to remain subdued, while higher costs could offset productivity savings, TheFly reported.
PepsiCo’s North America Trends Remain In Focus
PepsiCo Foods North America (PFNA) reported 2% net revenue growth in the first quarter, while unit volume increased 2%, driven primarily by a 2% increase in savory-snacks volume. The company’s filing also showed PFNA organic revenue increased 1% in the quarter.
In the second quarter, PFNA net revenue declined 2%, while unit volume was flat. PepsiCo said the revenue decline was primarily driven by unfavorable net pricing.
For the first half of 2026, PFNA net revenue increased slightly, while unit volume grew 1%, driven primarily by a 1% increase in savory-snacks volume. PepsiCo said the first-half revenue increase was primarily driven by organic volume growth and a favorable acquisition impact, partially offset by unfavorable net pricing.
PepsiCo maintained its full-year 2026 guidance for 2% to 4% organic revenue growth and 4% to 6% core constant-currency EPS growth.
PepsiCo’s Pricing Strategy In Focus
PepsiCo is also preparing to raise prices on some chips in the low-to mid-single-digit percentage range, with the company saying the increases are in line with inflation, according to Reuters.
The price increases are expected to take effect by the end of 2026 or early 2027 and will affect some chip brands and certain sodas, Reuters reported. PepsiCo had cut prices by up to 15% on products including Lay’s and Doritos in February. The company said the new prices will remain below levels seen before those earlier reductions.
Analyst Views Remain Mixed
JPMorgan’s downgrade follows a series of recent changes to PepsiCo’s ratings and price targets. Deutsche Bank analyst Steve Powers downgraded PepsiCo to ‘Hold’ from ‘Buy’ on Sept. 28 and lowered his price target to $138 from $155, TheFly reported. Powers cited lower confidence in the company’s North American recovery.
TD Cowen analyst Robert Moskow also lowered his price target to $133 from $145 while maintaining a ‘Hold’ rating on Sept. 28, according to TheFly. Moskow said the company’s shifting narrative around affordability and continued U.S. market-share losses increase the risk profile for 2027.
According to Koyfin data, 20 of 24 analysts currently rate PEP at either ‘Buy’ or ‘Strong Buy’.
PepsiCo To Report Q3 Results On Oct. 8
PepsiCo is scheduled to report its third-quarter 2026 results on Oct. 8. Analysts currently expect revenue of about $24.99 billion and adjusted earnings per share of $2.30 for the quarter, according to data compiled by FiscalAI.
On Stocktwits, retail sentiment around PEP remained in ‘Neutral’’ territory over the past 24 hours, with message volume at ‘Normal’ levels.
PEP shares are down nearly 10% year-to-date.
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