WallStreet: PepsiCo jumps to near 3-month highs; Upside risk prevails
InvestingOnline.com
10/07/2018, 20:00PepsiCo is closing its best day of 2018 as investors welcomed an upbeat earnings report and excellent ratings from analysts. PEP is rallying 4.40% on the day at 112.50.
The soda company reported an EPS of $1.61, improving expectations by $0.09 for the second quarter of 2018. Revenues beat expectations by $50 million as PepsiCo announced an increase of 2.4% in earnings to $416.09 million.
The Frito-Lay segment fueled earnings in the second quarter as it posted an increase of 4% between March and June. According to a press release, foreign exchange translation impacted the revenue positively by 1%.
Company’s FY2018 guidance was reaffirmed with a core EPS of $5.70. They will also increase advertising spending to revamp the beverage business after they complained about Coca-Cola increase in the advertising budget in the first quarter of the year.
CFRA revised up PEP price target to $120, a 10% upside from current prices
Analysts at CFRA decided to keep strong buy opinion on shares of PepsiCo, and they raised their price target by 9 dollars to $120 per share. “We expect growth to be achieved by the end of 2018 as PEP boosts media spending to defend against increased competition and benefits from new product launches.”
The note said that “margins widened more than we expected as we see productivity improvements being partially offset in the second half of 2018 by rising input costs, higher U.S. transportation expenses and as PEP invests some of the benefits from a lower U.S. tax rate into wage increases and higher media spending.”
PepsiCo crushes above the 200-day moving average
PepsiCo Daily chart July 10
Shares of PepsiCo are closing the day with 4.50% gains on the day at 112.50. The new price target would be an increase of around 10% from Tuesday’s close.
Technically, the unit is clearly bullish with potential for further highs. PepsiCo closed Tuesday with a strong note and expectations are for the share to continue the rallying in the next days.
Next resistances are at 113.30 and 114.00. Then a freeway to 116.00.
