Market Opportunity - PepsiCo

• EVENT: PEPSICO INC TO ANNOUNCE Q4 EARNINGS (February 9, Thursday): Analysts expects PepsiCo to deliver EPS of $1.65 per share on revenue of $26.83 billion. This compares to the year-ago quarter when earnings were $1.53 per share on $25.25 billion in revenue.
• EARNINGS FORECASTS ARE OPTIMISTIC: There are many reasons to be optimistic about PepsiCo’s revenue and earnings prospects in the next 12 months. Although macroeconomic headwinds such as high inflation and supply chain disruptions have impacted the company’s margins, the company has done a solid job. This included increasing its prices in some areas while limiting its output to offset inflationary effects. In the most recent quarter, the management raised earnings guidance for both fiscal 2022 and 2023. Not only is full-year revenue expected to grow at 12%, but versus prior guidance of 10% the company also boosted full-year earnings growth to 10%, up from 8%. The company’s price management has been applauded by Wall Street. The company’s investments in new brands, while adapting to new trends have begun to pay dividends. The still believes that there is plenty of room for growth in its core snacks and beverages business, while it also expects unit volume to continue rising by mid-single digits for beverages for the next few quarters and beyond. On Thursday >investors will want to see whether Pepsi will maintain this level of confidence to affirm its initiatives are working.
• MACROECONOMIC OUTLOOK: The Fed recently raised interest rates by 25 bps, its first hike for 2023. This marks a significant slowdown in the Fed's aggressive monetary tightening policy amid declining inflation. Fed Chair Jerome Powell said, "We can now say I think for the first time that the disinflationary process has started." On the other hand, the January jobs report showed non-farm payrolls increased by 517,000, way ahead of the 187,000-market estimate. The unemployment rate fell to 3.4% compared to the estimate of 3.6% which is the lowest jobless level in more than five decades.
• ANALYST OPINION PRICE EXPECTATIONS: DEUTSCHE BANK: $186 >, CREDIT SUISSE: $175 >, JP MORGAN: $189 >, BARCLAYS: $197 >, by the end of 2023.

• Calculations for exchange rate used as of 15:32 (GMT+1) 07/02/2023
• 1.00 lot is equivalent of 100 USD.

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