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    PepsiCo’s Elliott-Backed Overhaul Might Change The Case For Investing In PepsiCo (PEP)

    Simply Wall St·12/13/2025 16:27:57
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    • Earlier this month, PepsiCo outlined a multi-year turnaround plan shaped with activist investor Elliott Management, including cutting nearly 20% of its U.S. SKUs, closing manufacturing plants, reviewing its North American supply chain, and guiding to roughly flat 2025 earnings before targeting margin expansion and higher core EPS growth in 2026.
    • At the same time, PepsiCo is shifting toward affordability and innovation, lowering some prices, launching products with simpler ingredients, and deepening partnerships like its expanded Celsius stake and 2026 Mercedes-AMG PETRONAS F1 deal, to reignite demand while funding heavier marketing through cost savings.
    • We’ll now examine how PepsiCo’s aggressive SKU cuts and cost actions with Elliott Management influence the existing investment narrative on growth and margins.

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    PepsiCo Investment Narrative Recap

    To own PepsiCo today, you need to believe its North America reset can convert a flat 2025 into healthier growth and margins from 2026, without damaging brand strength. The short term catalyst is execution on SKU cuts, price investments, and supply chain changes; the biggest current risk is that cost actions and plant closures go too far and prolong volume pressure rather than easing it. Recent news does not change those fundamentals but brings them into sharper focus.

    The most relevant update here is PepsiCo’s 2025 and 2026 guidance, which frames the turnaround: low single digit organic revenue growth and roughly flat core EPS in 2025, then targeted 4 to 6 percent net revenue growth and 4 to 6 percent core constant currency EPS growth in 2026. That guidance underpins the investment case that today’s disruption could set up margin expansion if productivity savings do materialize as planned.

    Yet the real watchpoint investors should be aware of is how aggressive plant closures and SKU cuts could...

    Read the full narrative on PepsiCo (it's free!)

    PepsiCo's narrative projects $101.5 billion revenue and $11.8 billion earnings by 2028. This requires 3.4% yearly revenue growth and about a $4.2 billion earnings increase from $7.6 billion today.

    Uncover how PepsiCo's forecasts yield a $154.41 fair value, in line with its current price.

    Exploring Other Perspectives

    PEP 1-Year Stock Price Chart
    PEP 1-Year Stock Price Chart

    Across 41 fair value estimates from the Simply Wall St Community, views span from US$116 to about US$247 per share, with clusters across the mid US$140s to low US$180s. You can weigh these against concerns that PepsiCo’s heavy productivity push and plant closures may constrain future growth and consider what that could mean for the company’s longer term earnings power.

    Explore 41 other fair value estimates on PepsiCo - why the stock might be worth as much as 64% more than the current price!

    Build Your Own PepsiCo Narrative

    Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.