PepsiCo (PEP) Stock Forecast & Price Target

PepsiCo has demonstrated strong performance in its Frito-Lay North America (FLNA) segment, with growth rates of approximately 16% in 2022 and 10% in 2023, even amid flat volumes, showcasing resilience in demand relative to peers. The company is expected to achieve a conservatively modeled organic sales growth of 2.1% by 2026, with potential for upside, supported by strategic innovations and pricing adjustments. Additionally, the anticipated non-operational benefit of $50-75 million from the One North America plant closure is projected to enhance the North American Beverages margin by approximately 50 basis points, signaling improved operational efficiency.

PepsiCo faces significant challenges, including historical patterns indicating a potential contraction in its forward price-to-earnings (P/E) ratio, as seen during the 2008–09 recession when it dropped nearly 40%. The company is experiencing macroeconomic pressures combined with specific declines in its carbonated soft drink (CSD) segment, particularly affecting diet offerings, alongside a slowing performance in its Frito-Lay sector, which could severely limit its top-line growth. Furthermore, ongoing loss of market share in the beverage sector has raised concerns that PepsiCo may need to rethink its operational strategies, such as considering the refranchising of its North American bottling operations.