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Tue, Apr 15, 2025, 7:47 AM 2 min read
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Bank of America downgraded Pepsi (PEP) to Neutral from Buy, Schwab Network reported today. The bank predicts that the growth of the food-and-beverage giant's Frito-Lay North America unit will remain below its long-term trend this year.
Bank of America Expects PEP to Grow Slowly
Although Pepsi's international businesses are growing and performing well, they will not offset the decelerating growth of the Frito-Lay North America unit, the bank believes.
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Consequently, the bank does not expect Pepsi's earnings per share to increase more than a few percentage points in either 2025 or 2026. Moreover, Pepsi is unlikely to beat analysts' average revenue estimates going forward, according to Bank of America.
Estimates and Price Target Lowered
Bank of America cut its fiscal 2026 earnings per share estimate for PEP to $8.70 from $8.85 and reduced its FY27 EPS outlook to $9.27 from $9.45.
The bank's price target on PEP stock sank to $155 from $185.
The Recent Price Action of PEP Stock
In the last month, the shares have dropped 2.5%, while they are flat in the last three months and have fallen 13% in the preceding 12 months.
While we acknowledge the potential of PEP, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than PEP but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
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