PepsiCo Shares Slip On Jefferies Downgrade Over ‘Struggling’ US Business: Retail Mood Sours

PepsiCo shares slipped 0.22% in after-hours trading on Wednesday after the consumer beverage giant received a downgrade from Jefferies amid tariff worries, dragging down retail sentiment.

According to The Fly, Jefferies downgraded PepsiCo to Hold from Buy with a price target of $170, down from $171. This implies an upside of nearly 15% from Wednesday’s closing price.

According to the firm, there is limited upside in the PepsiCo stock, which has rallied 7% from its January lows. The firm warned that the U.S. business is "still struggling," but the international business is performing strongly.

It added that Frito Lay will continue to struggle, which could be a drag on PepsiCo's multiple.

Frito-Lay North America’s volumes fell 3% with ongoing higher food prices and consumers watching grocery budgets, the company said in its fourth-quarter earnings.

Jefferies thinks Frito’s inflection could take several quarters and suggests that better opportunities exist elsewhere in beverages.

Sentiment on Stocktwits remained bearish on Wednesday. Message volume increased to normal from low levels.

PEP sentiment meter and message volume on March 12 as of 10:00 pm ET

One bearish user remarked the company was not a consumer staple hedge.

On the contrary, a bullish watcher said they are hopeful about a 5% dividend raise.

Last month, PepsiCo, known for brands such as Pepsi, Lay’s, Gatorade, and Quaker, got a price target hike from Barclays to $168 from $153 with an ‘Overweight’ rating on the shares after Q4 earnings.

PepsiCo and several other consumer companies have reportedly sought an exemption from tariffs on certain ingredients not available from U.S. suppliers, Reuters reported, citing the Consumer Brands Association.

For Q4, Pepsi’s earnings per share (EPS) came in at $1.96, above consensus estimates of $1.94. Its revenue, however, stood at $27.8 billion, missing estimates of $27.9 as quoted by Wall Street analysts.

Pepsi shares are down 2.6% year-to-date.

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