Will PepsiCo announce a major strategy change when it reports earnings next week?

PepsiCo (NASDAQ:PEP) is set to report earnings on October 8 before the market opens.

Bank of America is the latest firm to pull back estimates on PepsiCo (PEP) ahead of the food and beverage giant’s Q3 earnings report. Due to consumption trends and market share loss for PepsiCo (PEP) in key areas, BofA now sees FY24 revenue growth of +1%, FY25 revenue growth of +3.1%, 2024 EPS of $8.00 vs. $8.14 consensus, and 2025 EPS of $8.45 vs. $8.70 consensus. In the last 90 days, 14 sell-side analysts have cut estimates on PepsiCo (PEP) and none have raised estimates.

Analyst Bryan Spillane and his team think that if PepsiCo’s (PEP) weakness continues that it will raise the question again about the potential for larger actions including restructuring, portfolio review, and beverage franchising. The firm thinks it is worth noting that there has been little progress with the North America beverages business since activists pushed the separation case back in 2012. The firm’s view is that it is reasonable for investors to expect PepsiCo (PEP) to challenge assumptions by reviewing its portfolio, as it has in the past by actions such as spinning off the fast-food restaurant business (KFC, Pizza Hut and Taco Bell) and divesting Tropicana. There is also the question on what PepsiCo (PEP) plans to do with its large stake in Celsius Holdings (CELH) that could be addressed.

Shares of PepsiCo (PEP) are up 0.1% over the last 52 weeks vs. +34% for the S&P 500 Index, +28% for Coca-Cola Company (KO), and +18% for Keurig Dr Pepper (KDP). Despite the sluggish performance, PepsiCo (PEP) has a clean sweep of Buy ratings across Seeking Alpha analysts, Wall Street analysts, and Seeking Alpha’s Quant Ratings system.