Core Viewpoint - Morgan Stanley has assigned a "Hold" rating to PepsiCo (PEP.US) with a target price of $165, reflecting a market capitalization of approximately $203.58 billion and a 52-week stock price range of $177.50 to $127.60 [1] Financial Summary - Earnings per share (EPS) forecasts for fiscal years 2025 to 2028 are $8.16, $8.12, $8.55, and $9.07, respectively, with the price-to-earnings (P/E) ratio decreasing from 18.6x to 16.6x [1] - Dividend yield is projected to increase from 3.4% in 2025 to 4.2% in 2028, indicating long-term return potential [1] Market Strategy - PepsiCo's Q4 EPS is expected to achieve mid-single-digit growth, driven by productivity improvements, accelerated growth in international beverage business, currency advantages, and cost control [1] - Specific measures include the closure of two factories and a reduction of 7,000 employees in the North American snacks business to enhance automation levels [1] - The North American beverage business is addressing overcapacity issues through manufacturing and distribution adjustments [1] - The global capability center, although starting later, has significantly optimized labor and automation efficiency [1] Marketing and Sales Performance - Although marketing expenditure as a percentage of sales has slightly decreased, the company has maintained advertising effectiveness through productivity improvements and optimized digital spending [1] - International beverage sales volume declined by 5% year-over-year in Q3, but growth is expected to resume in Q4, with international business projected to contribute 40% of total revenue in the long term [1] Valuation Analysis - The target price is based on a 2027 P/E ratio of 18x, which is approximately a 10% discount compared to peers like Coca-Cola and Procter & Gamble, primarily due to weak market share trends in the U.S. and potential reinvestment needs [2] - This discount is partially offset by productivity improvements and international growth potential [2] Growth Drivers - Key growth drivers include high-profit contributions from international business, margin expansion in North American beverages driven by product portfolio reshaping, and cost curve optimization in the snacks business through reduced fixed costs [2] Risk Factors - Upside risks include recovery in snack revenue, strong performance in international business, margin improvement, and recovery of market share in North American beverages [2] - Downside risks involve insufficient reinvestment returns, macroeconomic fluctuations, slow recovery in North American business volume, commodity and currency volatility, continued weakness in beverage market share, and the impact of GLP-1 drugs on consumer behavior [2]

Core Insights - PepsiCo (PEP.US) shares rose over 3%, closing at $149.67 following the release of its third-quarter earnings report which exceeded Wall Street expectations [1] Financial Performance - PepsiCo reported third-quarter revenue of $23.94 billion, slightly above Wall Street's forecast of $23.85 billion [1] - The adjusted earnings per share were $2.29, surpassing the market expectation of $2.27 [1] Business Segments - The U.S. snack business continues to face challenges, while the U.S. beverage segment shows signs of recovery [1]

Overnight Market Trends - International oil prices rose strongly, with the US oil main contract up 1.72% at $66.31 per barrel and the Brent crude main contract up 1.55% at $69.58 per barrel [2] - International precious metal futures closed mixed, with COMEX gold futures down 0.41% at $3345.40 per ounce and COMEX silver futures up 0.83% at $38.44 per ounce [3] - London base metals closed higher across the board, with LME zinc up 0.98% at $2737.50 per ton, LME tin up 0.83% at $33070.00 per ton, and LME copper up 0.45% at $9678.00 per ton [4] - Most domestic futures contracts closed higher, with coking coal up over 3%, rubber, 20 - gauge rubber, and coke up over 2%, and iron ore, PX, butadiene rubber, hot - rolled coils, and glass up over 1%. Low - sulfur fuel oil (LU) fell slightly [4] - US soybeans closed up 0.86% at 1022 cents per bushel, US corn down 0.86% at 402 cents per bushel, US soybean oil up 2.59% at 56 cents per pound, US soybean meal up 0.19% at $269 per short ton, and US wheat down 1.34% at 534 cents per bushel [4] Important News Macroeconomic News - One of the three Iranian nuclear enrichment facilities hit by the US last month was largely destroyed, while the other two were less damaged [7] - The EU is preparing a potential tariff list and export control measures against US services in case the trade negotiation with the US breaks down [7] - Trump called on the Fed to cut interest rates again [8] - US unemployment benefit claims fell for the fifth consecutive week, but continued claims were near the highest level since 2021, indicating a possible rise in the unemployment rate [8] Energy and Chemical Futures - As of July 17, the total inventory of national float glass sample enterprises was 64.939 million heavy cases, down 3.22% week - on - week, hitting a more than 5 - month low. The national float glass output increased 0.18% week - on - week to 1.109 million tons [10] - As of the week ending July 16, Singapore's fuel oil inventory fell to a two - week low, light distillate inventory rose to a two - week high, and middle distillate inventory fell to a 10 - week low [12] - As of July 17, domestic soda ash manufacturers' total inventory increased 2.26% week - on - week, hitting a new high [12] - As of the week ending July 11, US natural gas inventory increased 46 billion cubic feet week - on - week, down 4.9% year - on - year, but 6.2% higher than the 5 - year average [12] Metal Futures - As of Thursday, the national metallurgical - grade alumina operating capacity utilization rate rose 0.82 percentage points to 80.74% [14] - Zangge Mining's lithium resource development was suspended due to a mining license issue [14] - Vedanta Resources' Zambian copper mine plans to renovate its smelter to increase production [14] - From July 21, trading fee standards for industrial silicon and polysilicon futures contracts will be adjusted, and daily opening position limits will be set [15][16] Black - Series Futures - There were rumors of scale - based production cuts in Wuhai's coking industry, but the actual reduction was limited [18] - As of the week ending July 17, rebar production and apparent demand fell for the second consecutive week, with factory inventory decreasing and social inventory increasing [18] - The average national profit per ton of coke was - $43, with significant regional differences [18] Agricultural Product Futures - The Ministry of Agriculture and Rural Affairs will focus on adjusting production capacity and stabilizing policies to promote stable pig production [20] - The number of ships waiting to load sugar in Brazilian ports and the quantity of sugar waiting to be shipped decreased [20] - Indonesia's biodiesel consumption has reached 7.42 million kiloliters this year, and the mandatory blending ratio has been raised from 35% to 40% [22] - Malaysia's August crude palm oil reference price rose, and the export tax will increase from 8.5% to 9% [22] - The annual grain production has a good foundation, with summer grain achieving stable and bumper harvests [22] - Global palm oil prices are expected to rise 33% by the end of 2025 due to supply tightening and increased demand [23] - Indonesia is studying raising the biodiesel blending ratio to 50%, with research expected to be completed by the end of the year [23] - Argentina's 2024/2025 soybean production forecast was raised, while the 2025/2026 wheat production forecast was lowered [23] - The proportion of US soybean and corn planting areas affected by drought decreased [24] - Brazil's 2025 soybean export and processing volume forecasts were raised [26] - The International Grains Council maintained its 2025/2026 global corn production forecast, with a slight improvement in the US outlook but a downgrade for Hungary and Romania [26] - US 2024/2025 and 2025/2026 soybean net sales were in line with or exceeded market expectations [26] Financial Markets Financial - A - share indices rose, with the Shanghai Composite Index up 0.37%, the Shenzhen Component Index up 1.43%, and the ChiNext Index up 1.76%. Market turnover reached 1.56 trillion yuan [28] - The Hong Kong Hang Seng Index fell 0.08%, while the Hang Seng Tech Index rose 0.56%. Southbound funds had a net purchase of HK$1.855 billion [28] - Insurance funds have surveyed A - share listed companies over 9800 times this year, focusing on high - dividend and technology - growth sectors [29] - Citi upgraded China and South Korea stock market ratings to overweight and downgraded India's to neutral [31] - South Korean investors are accelerating their allocation of Chinese assets [31] - The Beijing Stock Exchange plans to conduct internal tests on July 19 [32] - The latest list of Hangzhou's key companies planning to go public includes 315 companies [32] - Northeast Securities, Kaiyuan Securities, and Shanghai Securities ranked in the top 5% in the second - quarter market - making evaluation [32] - TSMC's Q2 net profit and revenue exceeded market expectations, and it raised its annual sales growth forecast [32] Industry - The consumption tax policy for ultra - luxury cars will be adjusted from July 20, with the threshold lowered to 900,000 yuan and new energy models included [34] - The Ministry of Agriculture and Rural Affairs will focus on adjusting production capacity and stabilizing policies to promote stable pig production [34] - As of the end of June 2025, there were 19,756 private fund managers, managing 140,558 funds with a total scale of 20.26 trillion yuan [35] - 90 rural banks have exited this year, more than the total of last year [35] - The Securities Association of China launched a special survey on the information technology of securities brokerages' branches [35] Overseas - Trump said the US may implement the tariff rate on Japan as previously stated and may soon reach a trade agreement with India [36] - Japan's exports to the US fell for the third consecutive month in June due to US tariff policies [38] - Trump announced that the federal government will no longer fund California's high - speed rail project [38] - US initial jobless claims fell to the lowest level since mid - April, indicating a resilient job market [39] - US retail sales rebounded strongly in June, mainly driven by automobile sales [39] - The EU Commission proposed a new budget from 2028 - 2034, with a focus on defense, economic competitiveness, and agricultural subsidy reform [39] - Iran will not resume nuclear negotiations with the US unless the US meets its pre - conditions [39] - US, European stock indices rose. S&P 500 and Nasdaq hit new highs. Some companies' Q2 earnings exceeded expectations [41] - PepsiCo, Novartis, Volvo, and Netflix's Q2 earnings either met or exceeded market expectations [42][43][44] Commodity Markets - International oil prices rose due to supply constraints in Iraq's Kurdish region and an unexpected decline in US crude inventory, but the increase was limited by rising gasoline inventory [46] - International precious metal futures closed mixed as Fed officials had different views on monetary policy [46] - London base metals rose across the board. US copper tariff policy changes affected the market, and LME copper inventory increased [46] - Trading fee standards and daily opening position limits for industrial silicon and polysilicon futures contracts on the GZFE will be adjusted from July 21 [47] Bond Market - The domestic bond market was slightly stronger, with most Treasury bond futures rising slightly. The central bank conducted a net injection of 360.5 billion yuan through reverse repurchase operations [48] - Hong Kong's GSS+ bond issuance in 2024 exceeded $43.1 billion, accounting for 45% of Asia's international GSS+ bond market [50] - Japan's US Treasury holdings increased in May, while China's decreased [51] - US Treasury yields were mixed, mainly affected by Trump's statements on the Fed chair and market interpretations of economic data [51] Foreign Exchange Market - The on - shore RMB against the US dollar closed lower on Thursday, while the central parity rate rose. The US dollar index rose, and most non - US currencies fell [52]