Morgan Stanley Expects EPS Upside For PepsiCo
In a report published Monday, Morgan Stanley analyst Dara Mohsenian reiterated an Overweight rating and $99.00 price target on PepsiCo (NYSE: PEP).
In the report, Morgan Stanley noted, “One of the key pushbacks we have received on our PEP OW is if stock upside is limited given it will be difficult for PEP to trade at a P/E premium to KO, with PEP's P/E already closing to near parity. We do believe PEP will trade at a P/E premium to KO going forward, although we do not expect a large premium, so this concern is certainly partially valid in our minds. This is reflected in limited 12% upside (includes 3% div yield) to our recently raised price target, but we still view this upside as compelling in the context of a difficult CPG environment. We also believe Pepsi has less downside risk than most of our coverage, as any unexpected fundamental weakness could lead to greater shareholder activism and/or potential strategic options. Thus, we reiterate our OW.”
PepsiCo closed on Friday at $91.55.
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