PepsiCo (PEP) Stock Forecast & Price Target

PepsiCo has demonstrated impressive growth in its Frito-Lay North America (FLNA) segment, with sales increasing approximately 16% in 2022 and around 10% in 2023, despite flat volumes, highlighting the company's ability to maintain a strong pricing strategy during inflationary periods. The company's international operations accounted for 40% of total sales and operating profits in 2024, reflecting its significant global market presence and diversified revenue streams. Furthermore, PepsiCo's integrated control over its US manufacturing and distribution, combined with strategic bottling partnerships overseas, positions it well for sustainable long-term growth, similar to successful models observed in the industry.

PepsiCo's stock is facing a negative outlook due to significant macroeconomic pressures that are expected to limit top-line growth, particularly within its carbonated soft drinks (CSD) category, where specific diet offerings are experiencing heightened competition. Additionally, the performance of the Frito-Lay segment is also showing signs of slowing growth, compounding the challenges facing the company. Historically, during economic downturns such as the 2008–09 recession, PepsiCo's forward price-to-earnings (P/E) ratio has contracted by nearly 40%, indicating vulnerability to external economic shocks that could impact investor confidence and stock performance.