Jefferies ups PepsiCo target, says ‘there is a lot to like’

Jefferies analyst Kaumil Gajrawala raised the firm’s price target on PepsiCo to $211 from $209 and keeps a Buy rating on the shares. With a revamped portfolio, a higher asset base, moderating capex spending, stable input costs and new management prioritizing margins, PepsiCo Beverages North America margins should finally inflect, the analyst tells investors in a research note. The firm says the year after PepsiCo bought its U.S. bottlers, PBNA margins were 18%, and today they are 11%. It believes improved PBNA portfolio mix will help drive a turnaround. Jefferies thinks “there is a lot to like about Pepsi.” The international business is overlooked despite its “wide moat and durability,” Frito should return to profitable volume growth, and PBNA margins should inflect, the firm contends.