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Apparently, seeing PepsiCo (PEP) shares trade near a 52-week low isn’t a tasty buying opportunity for the team at JP Morgan.
JP Morgan analyst Andrea Teixeria slashed her rating on PepsiCo to Neutral from Overweight on Tuesday. She also marked down her profit estimates for fiscal year 2027 and fiscal year 2028.
In effect, the veteran packaged foods analyst is signaling the company’s upcoming earnings report in a few weeks could be tough on the eyes. Should that happen, it would deal another large blow to a food giant that promised much better financial results in the second half of 2026 at the hands of cost cuts and improved product execution.
“The upcoming quarter may still show a decent top- and bottom-line, especially with International likely performing well on favorable weather tailwinds and a strong FIFA World Cup. However, excluding these non-recurring tailwinds, judging from the tracked channel and recent price increase announcements, we believe trends in North America have likely continued to underperform management expectations,” Teixeria said.
She added, “Despite the several interventions including ingredient reformulation and packaging, increased spend and lower prices, FLNA salty snacks performance has been lackluster, in our view, and the recovery appears to have stalled following 1Q26. Given the underperformance, in conjunction with new transportation pressures, we suspect PEP will likely have to lean more heavily on productivity in 4Q26 to make its EPS guidance (low-end of +5-7% range) as we find it difficult to forecast sequential improvement in North America trends through the end of the year.”
PepsiCo’s challenges were apparent in its second quarter earnings release in July.
In the second quarter, PepsiCo reported revenue of $24.2 billion, up 6.4% year over year and above Wall Street expectations. Adjusted earnings per share came in at $2.20, roughly in line but slightly below some analyst estimates.
The biggest concern was weakness in North America, where snack volumes were flat and beverage volumes declined 4% as consumers pulled back on discretionary purchases.
PepsiCo had been cutting prices on brands like Lay’s and Doritos to win back shoppers, which has pressured pricing power and margins. Core operating profit margins fell 40 basis points year over year in the quarter.
Management maintained its full-year outlook, calling for 2% to 4% organic revenue growth and 4% to 6% core constant-currency EPS growth. But execs warned that North American recovery may take longer and input cost inflation could rise in the second half of the year.
