Will PepsiCo Stock Hit $190? Wall Street Analysts Think So
The company is not a popular investment right now, but it presents a decent buying opportunity for discount buyers.
As is often the case when a well-known company is about to release its quarterly earnings report, analysts have been adjusting their price targets accordingly. In this case, Pepsico (prototype -0.14%). Ratings for the large beverage and snack food giant range from poor to very good, with one of the most bullish views on the company’s stock predicting double-digit percent upside potential.
Rely on sustained profitability
Analysts with a bright outlook on PepsiCo’s future Bank of America Securities analyst Brian Spillane. The company is scheduled to report second-quarter earnings later this week, and on Monday Spillane cut his price target on the stock to $190 from $210. Despite the price target cut, the analyst remains bullish on PepsiCo, rating it a Buy. Spillane’s target implies a 17.2% upside for the stock over the next 12 months.
The analyst expressed concern about the relatively weak demand in the food and beverage industry, but he believes PepsiCo stock is attractively priced at current levels. He also pointed to the positive reality for the company, which is that the company is consistently profitable and generates comfortable margins.
In his view, that won’t change. The company’s “long-term profitability remains fairly stable,” Spillane wrote in a recent PepsiCo memo.
PepsiCo is an attractive stock for several reasons.
I have liked PepsiCo’s business for years and continue to think the stock is a good buy. That modest valuation is tempting in the same way as a pack of Doritos or an ice-cold Pepsi. Incidentally, the company’s two product segments (snacks and beverages) occupy pride of place on supermarket and convenience store shelves.
I’m a dividend person, so I also really like PepsiCo’s focus on dividend payments. They pay a steady dividend every quarter, and the dividend yield is currently over 3%.
PepsiCo is scheduled to report its second-quarter earnings before the market opens on Thursday, July 11. That report will confirm that this stock is worth a closer look.
Bank of America is an advertising partner of The Ascent, a Motley Fool affiliate. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has a position in and recommends Bank of America. The Motley Fool has a disclosure policy.
