PepsiCo, Inc. reported third-quarter results Wednesday that were ahead of expectations and raised its outlook for the full year.
The company’s sales grew 8.8 percent year-over-year to $21.97 billion, topping the consensus estimate of $20.81 billion, while core earnings grew 10.05 percent to $1.97 per share, exceeding expectations of $1.84 per share.
Wells Fargo on PepsiCoAnalyst Gary Mobley maintained an Equal Weight rating while raising the price target from $172 to $174.
“Q322 was marked by +16 percent organic sales growth, driven by pricing +17 percent but nevertheless with just -1 percent volume impact as elasticities remain low,” Mobley said in a note.
“2022 seems a wrap with a doable Q4, with the PEP story now firmly on 2023, in our view.”
In 2023, the company will still face commodity, currency, and inflation headwinds, but much less than in 2022 and “will need to slow the rate of SG&A increases relative to recent years,” he said.
PepsiCo has “its hands firmly on the wheel of its own destiny here,” Mobley said.
RBC Capital Markets on PepsiCoAnalyst Nik Modi reiterated a Sector Perform rating while raising the price target from $165 to $170.
PepsiCo’s results are “highlighting strong topline momentum with solid price realization and better elasticities,” Modi wrote in a note.
Wedbush on PepsiCoAnalyst Gerald Pascarelli maintained an Outperform rating while raising the price target from $185 to $190.
“While read throughs had indicated that it was likely going to be another strong, price-led quarter, the performance and outlook came in better than anticipated which was clearly reflected in the stock price performance,” Pascarelli said.
“While guidance implies that trends will slow sequentially in 4Q, the company has put itself in a position to deliver its second consecutive year of above algorithm, double-digit local currency EPS growth,” the analyst said.