Citi downgraded PepsiCo to Neutral from Buy and cut its price target to $145 from $170, citing persistent weakness in the company's North American business that strategic actions have so far failed to reverse. Analyst Filippo Falorni noted that PepsiCo Frito-Lay North America and PepsiCo Beverages North America have remained soft despite price reductions, innovation, and shelf space gains. Second-quarter North America results missed expectations, with PFNA organic sales growth down 2% against a flat consensus estimate, while PBNA grew 1% versus expectations of 2%. Management identified gas price-driven budget strains as the primary driver behind the volume shortfalls, but Falorni expressed concern that improvement is more dependent on a broader macro inflection than within PepsiCo's control. The downgrade also reflects doubts about the full-year guidance trajectory, as the reiterated 2026 EPS growth target of 5-7% points to the low end and implies a fourth-quarter North America-driven reacceleration that Citi finds increasingly difficult to underwrite with confidence. Looking further ahead, Citi flagged an increasingly challenging 2027 set-up as PepsiCo cycles its North America innovation and pricing actions, faces still-elevated cost inflation, and benefits less from large productivity savings, while structural concerns including GLP-1 drug adoption leave limited room for a multiple improvement even off the current depressed base.
PepsiCo IncCiti downgraded PepsiCo to Neutral and cut price target, citing persistent North America weakness and doubts on guidance.