JPMorgan adjusted its rating on PepsiCo (NASDAQ:PEP) from Overweight to Neutral, also reducing its price target from $185 to $176 per share, as mentioned in a recent note on Tuesday. This change occurs even though JPMorgan recognizes PepsiCo as being in a strong position and maintains confidence in its projections for 2024.
The analysts at JPMorgan clarified that they do not identify any fundamental issues with PepsiCo and remain optimistic about the company’s performance and its ability to meet its 2024 objectives. Nevertheless, they suggest that the scope for additional positive adjustments to earnings estimates is limited and point to more compelling investment options in the beverage industry.
In particular, JPMorgan highlighted Coca-Cola and Keurig Dr Pepper for their superior expected top-line growth in 2024 and the absence of concerns related to PEP’s GLP-1 issues.
The new price target of $176 is based on a 20 times price-to-earnings ratio, applied to JPMorgan’s estimated earnings per share of $8.82 for Calendar Year 2025. JPMorgan’s analysts believe that PepsiCo’s current market price already balances the optimistic and cautious perspectives surrounding the company.