Shares of PepsiCo (PEP) are down in today’s trading after Reuters reported that the food and beverage company is facing a lawsuit for marketing its Gatorade protein bars as healthy, according to a ruling by U.S. District Judge Casey Pitts in San Jose, California. In reality, these bars contain more sugar than protein and even more sugar than some candy bars. The judge said the claims brought by three fitness enthusiasts, who allege that PepsiCo’s marketing was deceptive, were plausible.
The lawsuit accuses PepsiCo of creating a misleading “health halo” around Gatorade bars with claims like “help muscles rebuild” and “backed by science,” while the bars actually contain 29 grams of sugar, surpassing the American Heart Association’s daily limit for women, and only 20 grams of protein. The plaintiffs argue they would not have purchased the bars or would have paid less if they had known the true nutritional content.
PepsiCo countered that its marketing was not deceptive, especially for flavors like Chocolate Chip and Cookies and Cream. However, the judge noted that consumers might not easily interpret the sugar content and could be misled by the company’s claims. The ruling allows the plaintiffs to continue pursuing their claims, with their lawyer expressing satisfaction with the decision.
Is PEP Stock a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on PEP stock based on nine Buys, eight Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 2% decline in its share price over the past year, the average PEP price target of $186.35 per share implies 8.3% upside potential.
