Street View: Pepsi’s strategy gains traction, but US growth needs a refill

PepsiCo PEP.O reported better-than-expected quarterly results on Thursday, driven by steady demand for its sodas and snacks in the U.S. and other major markets, including Europe

Co's second-quarter revenue rose about 1% to $22.73 bln, compared with analysts' average estimate of a 0.99% decline, according to data compiled by LSEG

Stock rated "hold" from an average of 24 analysts' ratings; median PT is $150, per data compiled by LSEG

MIXING RIGHT INGREDIENTS, BUT FLAVORS STILL SETTLING

J.P.Morgan ("neutral," PT: $157) says PEP’s product mix is well-positioned to drive steady organic revenue growth over the long term, with snacks and beverages among the more resilient consumer packaged goods categories

RBC Capital Markets ("sector perform," PT: $146) says PEP still has more work to do to get domestic top-line trends improving and back to where they need to be for a return to algorithmic growth

Morningstar (fair value: $162) sees early signs that co’s focus on innovation and away-from-home channels is driving U.S. snack and beverage volume growth.

"We expect a rising international sales mix (from 40% now) and accretive margins to help lift overall profitability in the coming years," adds Morningstar

Piper Sandler ("overweight," PT: $160) says there is a near-term risk of execution disruptions, but believes integrating the North America business will create long-term value