Why PepsiCo Stock Rebounded Today

stock pepsico (prototype 3.62%) The stock rebounded today, a day after falling 3% after reporting first-quarter earnings.

The food and beverage company beat headline sales and profit estimates, but a product recall at its Quaker Foods division hurt its first-quarter results and hurt sales in North America.

But today, stocks have more than made up for those losses after an upbeat note. Morgan Stanley. As a result, the stock was up 3.9% as of 2:42 PM ET on Wednesday.

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Morgan Stanley believes PepsiCo is priced well.

Although PepsiCo still trades at a premium S&P 500Morgan Stanley said valuations were compressed following first-quarter results and expected a rebound later this year due to improving trends, strength in international markets, favorable year-over-year comparisons and improving cost pressures.

The investment bank strongly reaffirmed its overweight rating on PepsiCo and designated it a top pick. The target price is $190, which represents an 11% upside from yesterday’s close.

In fact, the company expects its performance to improve later this year, with organic revenue growth of at least 4% and core constant currency revenue up at least 8%.

Is PepsiCo a Buy?

Considering its price-to-earnings ratio of 26.8, this stock looks fairly valued for a company with a good reputation for stable growth in a recession-proof industry.

PepsiCo is known for its reliable dividends and consistent dividend growth, and its current yield is 3%. This means stocks are sensitive to interest rates because dividend stocks compete with bond yields for investor funding. If interest rates fall, there can be an upward trend.

For long-term investors looking for dividend income, PepsiCo looks like a good stock, but we don’t expect dramatic growth at its current valuation.