Pepsi reports earnings later this month.
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PepsiCo will report second-quarter earnings later this month, and the results will likely be strong, according to J.P. Morgan. That could fuel a raise in the beverage giant’s full-year outlook.
Analyst Andrea Teixeira reiterated an Overweight rating on Pepsi (ticker: PEP), although she lowered her price target on the shares to $154 from $155. That said, she’s upbeat about the coming report, and boosted her earnings-per-share estimate to $1.52 from $1.44.
She predicts the company will deliver strong sales, as it laps a small decline in the year-ago period, which was dominated by Covid-19. In its previous quarter, Pepsi said organic sales growth rose 2.4%, and Teixeira estimates it will climb 7.7% this quarter—potentially higher, given an acceleration of the reopening in North America.
“Following a strong first quarter (against toughest comps of year), an easy lap in the second quarter, and further recovery expected in the second half of 2021, we think Pepsi is well positioned to drive double-digits core constant currency earnings per share,” above the company’s guidance for high single-digit growth, Teixeira writes.
For the full year, she sees Pepsi earning $6.13 a share, a few cents ahead of consensus. A strong second-quarter report could lead the company to boost its guidance, but she notes that will depend on whether Pepsi chooses to do some incremental marketing spending to sustain its top-line growth.
Pepsi stock was little changed in recent trading, up 0.1% to $148.33. The shares have climbed 11.5% in the past 12 months, but are basically flat year to date.
The company’s previous earnings report, delivered in April, was better than expected, but that did little to move the needle for the shares, even as other analysts have gotten more bullish.
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