PepsiCo is tipped by Morgan Stanley to top earnings expectations in back half of the year
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Morgan Stanley thinks PepsiCo (NASDAQ:PEP) has topline upside after taking in the most recent scanner data trends in the U.S. Analyst Dara Mohsenian and team advised that the data read contrast with recent forward consensus estimates on the food and beverage giant.
"We are encouraged by Pepsi's recent acceleration in US scanner data to 13.7% QTD growth in Q3, up from strong 9.7% growth in H1, which give us even greater visibility on our call for continued topline upside vs consensus in H2, and EPS upside."
The scanner trends are seen being an early indicator for stock outperformance off the expected EPS boost.
The long-term view from Morgan Stanley on PepsiCo (PEP) is also very positive on the premise the company has sustainably accelerated organic sales growth with favorable execution changes, greater capacity additions in the last few years, reinvestment in marketing, a mix shift to the higher growth snacks/international business, and higher growth M&A contribution. The higher growth level is said to be not fully factored into valuation, with PepsiCo (PEP) noted to be at a EV/EBITDA discount to large cap peers.
Morgan Stanley has a price target of $198 on PEP.
See all the valuation metrics on PepsiCo.