Morgan Stanley Downgrades PepsiCo Rating Following Q2 Performance: Why Topline Upside Is Now Limited
Portfolio Pulse from Nabaparna Bhattacharya
Morgan Stanley analyst Dara Mohsenian has downgraded PepsiCo's rating to Equal-weight from Overweight, with a price target of $210, following the company's Q2 performance. Despite reporting a 10.4% YoY sales growth and raising its FY23 organic revenue growth outlook to 10%, Mohsenian believes that PepsiCo's valuation is now priced in for these positives, limiting the stock's upside. PepsiCo's relative valuation is now near a modern-day record high compared to its peers Coca-Cola and Keurig Dr. Pepper.
July 17, 2023 | 3:16 pm
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NEGATIVE IMPACT
PepsiCo's stock rating has been downgraded by Morgan Stanley due to limited upside potential, despite strong Q2 performance.
The downgrade by Morgan Stanley indicates a belief that PepsiCo's stock has limited upside potential, which could negatively impact investor sentiment and potentially lead to a decrease in the stock's price.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEUTRAL IMPACT
Keurig Dr. Pepper's stock may be indirectly affected by the downgrade of PepsiCo's rating, as the two companies are close competitors.
As a close competitor of PepsiCo, any changes in PepsiCo's stock rating could indirectly affect Keurig Dr. Pepper. However, the exact impact is uncertain.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 50
NEUTRAL IMPACT
Coca-Cola's stock may be indirectly affected by the downgrade of PepsiCo's rating, as the two companies are close competitors.
As a close competitor of PepsiCo, any changes in PepsiCo's stock rating could indirectly affect Coca-Cola. However, the exact impact is uncertain.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 50