Analyst Note| Nicholas Johnson |
Heading into wide-moat PepsiCo’s first-quarter earnings print, with its geographic mix somewhere in the middle of the spectrum relative to Coke and Keurig Dr Pepper, it was unclear how much of a bellwether these peers’ results would be. As such, we think investors were keenly focused on: 1) the resilience of the business in the quarter and 2) whether this performance was sustainable throughout the COVID-19 onslaught. Management commentary turned out to be mixed, with stellar results (top- and bottom-line beats relative to CapIQ consensus) juxtaposed with a retraction of full-year guidance and an expectation for a low-single-digit decline in second-quarter organic sales. As we update our near-term outlook, we do not plan to change our $140 fair value estimate and see shares as fairly valued.