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Goldman Sachs Cuts Target, Estimates for PepsiCo (PEP)

Beverage and snack food maker PepsiCo, Inc. ( PEP ) on Thursday saw its price target and earnings estimates lowered by analysts at Goldman Sachs.

The firm maintained its "Neutral" rating on PEP but cut its price target from $74 to $71. That new target suggests a smaller 15% upside to the stock's Wednesday closing price of $61.58.

Goldman cited currency fluctuations and a lower P/E target for the move. The analyst commented, "Although the valuation gap between KO vs. PEP has widened to 22% (versus 10-year average of 4%), we do not expect the gap to narrow in the near term given the lingering challenges in its US beverage operation."

Accordingly, Goldman lowered its 2011 and 2012 earnings estimates for PEP from $4.43 to $4.40 and $4.84 to $4.75, respectively.

PepsiCo shares rose 43 cents, or +0.7%, in premarket trading Thursday.

The Bottom Line

Shares of Pepsico ( PEP ) have a 3.35% dividend yield, based on last night's closing stock price of $61.58. The stock has technical support in the $57-$60 price area. If the shares can firm up, we see overhead resistance around the $64-$66 price levels.

PepsiCo, Inc. ( PEP ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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