PepsiCo (NASDAQ:PEP) edged up 1.34% on Friday, closing at $141.39, as the stock showed relative resilience in a holiday-shortened week. Despite the uptick, shares remain 17.55% below their 52-week high of $171.48 reached in February, reflecting ongoing caution among analysts.
Over the past week, PepsiCo gained 0.48%, outperforming the broader market. The S&P 500 fell 2% during the same period, while the Nasdaq Composite dropped 4.6%. This relative strength highlights PepsiCo's defensive appeal amid broader market weakness, though it has not reversed the stock's 9.84% decline over the past three months.
Analyst Price Target Cuts
In the last two days, three major banks trimmed their price targets on PepsiCo. Jefferies lowered its target to $162 from $164, maintaining a hold rating. BofA reduced its target to $164 from $173, keeping a neutral stance. Citi cut its target to $170 from $182 but retained a buy recommendation. These adjustments come ahead of the company's second-quarter earnings report, scheduled for July 9, rather than after.
Despite the cuts, the average analyst target across 24 analysts tracked by MarketScreener stands at $167.23, which is approximately 18.27% above Friday's closing price. This gap suggests that many analysts still expect a recovery in the second half of the year, though recent weakness in PepsiCo's North American performance has dampened near-term sentiment.
Consumer Staples Sector Performance
The consumer staples sector received a boost on Friday, with the State Street Consumer Staples Select Sector SPDR ETF (NYSEARCA:XLP) rising 0.92% to $84.71. PepsiCo represents 4.44% of the ETF, behind Altria Group (NYSE:MO) and ahead of Mondelez International (NASDAQ:MDLZ), according to Schwab holdings data.
PepsiCo's defensive positioning helped it stand out during the week, but the stock's longer-term performance remains under pressure. The company's North America business continues to be a focal point, with Jefferies describing U.S. year-to-date numbers as weak and BofA cutting estimates due to a slower-than-expected recovery at PepsiCo Foods North America.
Q1 Results and Outlook
In its first-quarter report, PepsiCo posted net revenue growth of 8.5%, with organic revenue up 2.6%. Earnings per share surged 27%, and core EPS rose 9%. Chairman and CEO Ramon Laguarta noted that North America "continued to make progress." The company maintained its full-year 2026 guidance, calling for 2% to 4% organic revenue growth and 4% to 6% core constant-currency EPS growth.
However, the stock's current valuation reflects these challenges. With a market capitalization of approximately $193.85 billion, PepsiCo trades at a price-to-earnings ratio of 22.2 based on the latest data. The stock's performance suggests that analysts' targets are already pricing in a recovery for the back half of the year, leaving little room for disappointment in the upcoming Q2 results.
