Considering that Pepsi itself is little more than water with carbon dioxide, a raftload of sugar, and a few artificial flavors tossed in for variety, it’s not surprising that beverage company PepsiCo (NASDAQ:PEP) might look for other ways to make water sellable. It may well have found one, but investors aren’t enthusiastic about it, and PepsiCo shares are down fractionally in Wednesday afternoon’s trading.
PepsiCo’s latest development is known as Gatorade Water, and it’s pretty much just that: water. It’s water with a pH balance of 7.5 or better, making it alkaline, which is said to have some health benefits, like possibly preventing heart disease or cancer. However, these claims are largely untested, so thinking of alkaline water as anything more than water will come with a certain amount of risk.
Gatorade Water is also said to have a “refreshing, crisp taste” to it, which is possible enough. After all, water has a different taste depending on its mineral content and other things, so Gatorade Water may well taste different from your area’s tap water.
Struggling Uphill
Just weeks ago, PepsiCo revealed part of the reason why it’s trying to sell water under a different brand name: its earnings report. While earnings came out ahead of estimates, quarterly revenue was down for the first time in around four years. That left a sour taste in investors’ mouths, as issues of price hikes and concerns about disposable income left the consumer in a bad position.
With inflation still running rampant in nearly every portion of the economy, it’s not surprising that sales of sugar water declined as hard as they did. It’s also not surprising to see PepsiCo branch out in response to those losses.
Is PepsiCo a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on PEP stock based on nine Buys and seven Holds assigned in the past three months, as indicated by the graphic below. After a 0.41% gain in its share price over the past year, the average PEP price target of $189.44 per share implies 13.51% upside potential.
