PepsiCo(US:PEP) Zhi Tong Cai Jing·2025-07-14 08:11Core Viewpoint - PepsiCo is expected to report a decline in both revenue and earnings for Q2 2025, with projected revenue of $22.4 billion, a year-over-year decrease of 0.5%, and earnings per share (EPS) of $2.04, down 10.5% year-over-year [1] Group 1: North American Market Challenges - The North American snack business is experiencing ongoing weakness, leading to a downgrade in earnings expectations and target price from $150 to $145 by Bank of America [2] - Sales growth in both the North American Food and Beverage segments is slowing, with the North American Food business (PFNA) facing significant margin pressure [2] - Bank of America anticipates a decline in PFNA operating margin by over 375 basis points to approximately 22.5%, below the market consensus of 23.5% [2][3] Group 2: International Business Outlook - Despite challenges in North America, Bank of America believes that international operations, particularly in Latin America, may provide a positive offset to the decline in the North American market [4] - The strong performance in international markets, aided by low base effects in countries like Mexico, could help maintain the company's overall organic sales and profit expectations for the year [4] Group 3: Earnings and Sales Projections - Analysts have revised Q2 EPS expectations down from $2.03 to $2.02, while maintaining 2026-2027 EPS estimates at $8.35 and $8.95 respectively [3] - Evercore ISI projects a lower organic sales growth rate of 0.9% for Q2, compared to the market consensus of 1.8%, with North American organic sales expected to decline by 2.0% [3] - The challenges faced by the Frito-Lay business segment have led Evercore ISI to lower its target price from $155 to $140, citing weak financial guidance and consumer pressure [3]