On Friday, Deutsche Bank (ETR:DBKGn) maintained a Hold rating on PepsiCo (NASDAQ:PEP) shares with a price target of $184.00. The analyst noted that despite a pre-market dip, which partially reversed recent gains, PepsiCo's shares might stabilize if the company demonstrates control over its future revenue and volume recovery during the conference call. Even though PepsiCo's fourth-quarter organic growth was below expectations at 4.5% compared to an anticipated 6%, the earnings per share (EPS) outperformed at $1.78, supported by stronger gross margins of 53.5%.
The company's fiscal year 2024 outlook was received more positively than expected, confirming a core constant-currency EPS growth of at least 8% and an overall growth of 7% after currency effects. However, PepsiCo has widened its organic growth projection to at least 4%, down from the 6% expected in October. The broader weakness in top-line growth for the quarter, particularly in the Frito-Lay North America (FLNA) segment, has been a point of concern for investors.
PepsiCo's conference call, scheduled for 8:15 AM, is anticipated to provide additional insights into the company's strategies for volume recovery. The discussion is also expected to cover PepsiCo's approach to cost inflation, gross margin outlook, and investment priorities. Despite the softer top line, the analyst suggests that the company's EPS finish ahead of expectations may lead to upward revisions in consensus EPS estimates for fiscal year 2024.
Investors are looking for clarity on PepsiCo's path forward, particularly in light of the volume softness observed in the FLNA segment. The company's ability to articulate a clear strategy for addressing these challenges will be crucial for maintaining investor confidence. The updated guidance for fiscal year 2024 suggests a cautious yet stable growth trajectory for PepsiCo, amidst the broader market conditions.
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