PepsiCo is fixing what broke, but shoppers may not care

Core Insights - PepsiCo reported better-than-expected results for Q3, with sales and profits exceeding analysts' expectations, leading to cautious optimism from Wall Street [1][4] - Bank of America upgraded its price target for PepsiCo to $155 from $150, citing "encouraging progress" despite the company being perceived as past its growth prime [2][3] Financial Performance - Q3 revenue increased by 2.6% year over year to $23.94 billion, slightly surpassing Wall Street consensus [7] - Adjusted EPS reached $2.29, exceeding estimates of approximately $2.26, aided by lower-than-expected foreign exchange impacts [7] - Full-year 2025 EPS outlook raised to $8.12 from $8.04, with FY26 and FY27 EPS estimates also increased to $8.60 and $9.10, respectively [9] Market Dynamics - Despite a solid global quarter, PepsiCo's core U.S. business faces challenges, with flat snack sales and a 3% decline in beverage volumes before adjustments [8][9] - Frito-Lay North America sales remained unchanged year over year, even with contributions from the acquisition of Siete Foods [9] - The beverage division saw a 2% organic sales gain, but overall volume pressures persist [9] Strategic Focus - PepsiCo is focusing on innovation, including clean-label snacks and prebiotic colas, to regain market share [4] - The company is under pressure from activist investors, with a $4 billion stake from Elliott Investment Management prompting discussions on operational efficiency and potential divestitures [9]