Morgan Stanley has revised its price target for PepsiCo (PEP, Financial), lowering it from $168 to $153 while maintaining an Equal Weight rating. This adjustment arises from continuing difficulties in the company's organic sales growth, especially within its high-margin Frito Lay North America segment.
The segment faced a 4% decline in volume during the first quarter, alongside an 8% drop in earnings per share year-over-year. Concerns persist regarding the potential ongoing struggles in U.S. organic sales growth, which face pressures from difficulties in the snacks category and U.S. beverage market share challenges.
Despite these issues, the firm recognizes that PepsiCo's valuation is already under pressure, following a further decrease after recent earnings were disclosed.
