PepsiCo Must Get Chippier

Headquartered in Purchase, NY, PepsiCo, Inc. (PEP) is the leading global snack food company and the second largest soft drink company, providing food and beverage products in more than 200 countries.

Strong international growth, productivity improvements, an aggressive share repurchase program, and a strong new product pipeline are driving high single-digit earnings growth for PepsiCo. Nevertheless, a sluggish domestic carbonated beverage environment, only modest low-single digit volume growth at Frito-Lay North America [FLNA] (3% in both 2006 and 2007), and pressure from higher energy and raw material costs (especially orange, grain, and energy costs) are concerns.

The Hold recommendation is maintained. We do not expect PepsiCo stock to outperform until expectations for volume growth at FLNA accelerates to 5% or more. The target price of $57.75 is based on a 16 P/E on trailing 12 month earnings.

Read the full analyst report on PEP

Read the full analyst report on PEP