PepsiCo (NASDAQ:PEP) is scheduled to release its third quarter Fiscal 2023 financial results before the bell on Tuesday, October 10. The beverage and snack giant’s quarterly performance is expected to benefit from its pricing power. Meanwhile, volumes may remain subdued due to consumer concerns about inflationary pressures.
It is worth mentioning that PEP has a strong track record of exceeding earnings expectations. The company surpassed estimates for 15 consecutive quarters, indicating the potential for it to outperform estimates again in the to-be-reported quarter.
Currently, the analysts expect PEP to post earnings of $2.15 per share in Q3, compared with $1.97 per share reported in the prior-year period. Meanwhile, the Street expects the company to post revenue of $23.42 billion in Q3, compared to $21.98 billion in the prior-year quarter.
What Wall Street Expects from PEP’s Results
Prior to the Q3 earnings release, Goldman Sachs analyst Bonnie Herzog reiterated a price target of $212 (32.3% upside potential) and her Buy rating on PEP stock. Herzog expects a slight beat in both the top and bottom lines in Q3. The analyst believes PepsiCo will benefit from consumer resilience despite the tough macro backdrop and strong international momentum.
Additionally, Herzog believes PepsiCo remains well positioned, given its strong brand portfolio and long-term growth opportunities in the Beverages unit.
Barclays analyst Lauren Lieberman slashed the price target on PEP to $179 (11.7% upside potential) from $198 but maintained a Buy rating. The analyst’s Q3 expectations are in line with the Street, albeit she expects a slightly stronger revenue performance and a more cautious margins outlook.
Is PEP a Buy, Sell or Hold, According to Analysts?
Analysts remain cautiously optimistic about PepsiCo stock. On TipRanks, PEP has a Moderate Buy consensus rating based on 10 Buys versus four Hold ratings. The average PEP stock price forecast of $200.38 implies 25% upside potential from current levels. Year-to-date, PEP stock is down 8.8%.
Insights from Options Trading Activity
TipRanks now presents options activity to help investors plan their trades ahead of earnings releases. Options traders are pricing in PEP stock to move by +/-3.77% after reporting earnings. The anticipated earnings move is determined by computing the at-the-money straddle of the options closest to expiration after the earnings announcement.
Ending Thoughts
PepsiCo has been able to maintain pricing strength despite inflation. However, it is crucial for the company to recover volume growth for sustained financial performance. Further, analysts are cautiously optimistic about PEP stock’s position in the food and beverage industry and its future trajectory.
