Analyst Note| Nicholas Johnson, CFA |
With headline performance in 2020 that belied the disruption across the broader economy, investors were seemingly less enamored with wide-moat PepsiCo’s value proposition heading into its first-quarter earnings print (as shares have been under pressure in recent months). Still, the firm continued its streak of impressive performance (with top- and bottom-line results ahead of FactSet consensus), dispelling--at least for now--the notion that its growth will be challenged in 2021. To be sure, comps will be toughest in the quarters ahead, but we expect the diversification in the business to allow the firm to maintain its growth algorithm irrespective of how consumer behavior evolves throughout the year. We don’t plan to materially change our $145 fair value estimate outside of time value adjustments, and while current trading levels no longer present a compelling margin of safety, we’d be happy buyers on any further pullbacks.