PepsiCo (PEP) Need Earnings Surprise To Trigger Upside Potential

Market is expecting a consensus EPS forecast of $2.16 slightly higher than $2.09 which is recorded for same quarter last year (2023). But BofA has reduced PEP fiscal 2024 earnings per share estimate to $8.08 from $8.15 and its 2025 target to $8.54 from $8.84.

BofA lowered its second-quarter organic sales growth forecast to 2.5% and its full-year expectation to 3.7% from 4.5%. BofA cut its price target on the stock to $190 from $210, though it reiterated a buy rating. This is due to the food and beverage industry continues to experience soft demand through mid-year.

Based on 16 Wall Street analysts offering 12 month price targets for PepsiCo in the last 3 months. The average price target is $188.40 with a high forecast of $210.00 and a low forecast of $174.00. The average price target represents a 16.21% change from the last price of $162.12.

The ownership structure of PepsiCo (PEP) stock is a mix of institutional, retail and individual investors. Approximately 42.14% of the company’s stock is owned by Institutional Investors, 0.55% is owned by Insiders and 57.31% is owned by Public Companies and Individual Investors.

So insider trading might not be significant to the stock price movement, but we might want to look at the institutional or hedge fund trading.

The last transaction by hedge fund seem to be in 1st quarter, and there have not been any in second quarter, but with the concerns.

There might be a slight downside move for the post earnings move, as PEP is currently in a downside, what could trigger a bullish reversal would be earnings surprise and if there is positive outlook for 2024 coming from PEP, then we could see PEP making a nice upside.

So how does the lower tracked fiscal second-quarter snacks and beverage volumes translate into lower earnings? Or could it be PEP manage to gain from other business revenue sources?

These are factors that could affect how PEP fiscal second-quarter earnings could turn out.

Though MACD is trying to make a crossover but I would think that with the fiscal second-quarter snacks and beverage volumes are tracking lower than expected, according to BofA Securities.

This might impact how traders and investors look at PEP, the MACD might make a bearish crossover, and as KDJ is showing a downward trend, with J value going down.

PEP might be trading on the downside prior to its earnings.

Though PEP could experience some decline in its upcoming earnings but it is currently still considered as a BUY by quite a few different analyst. What I would be expecting is PEP could be posting a surprise even though there is an expectation that the snacks and beverage volume could drop in the fiscal second quarter.

So if you would like to see if PEP has a potential, we could monitor how the price action moved these 2 days before Thursday (11 July).

Appreciate if you could share your thoughts in the comment section whether you think PepsiCo could provide an earnings surprise?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.