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Trends & Analysis
News

Gold continues to shine amid geopolitical worries

News

Crude oil dips for 3rd session after supply data

News

Is there an AI upside for AMD?

News

GBP/USD recovers following wage report

News

Buy the JPMorgan dip?

News

Goldman Sachs shares surge after earnings beat

Asset Watch

Should you fade the PepsiCo pessimism?

Tuesday, October 10, 2023

Bearish seasonality has come and gone, brightening the outlook for U.S. stocks. But one stock that hasn’t seen such a bright outlook? After suffering several fundamental ills, PepsiCo has been hammered in recent months. The latest hit came from Barclays, who noted on Oct. 3 that weight loss drugs like Ozempic could reduce demand for soda and potato chips. In other words, PepsiCo’s revenue could suffer if consumers shun snack foods for healthier alternatives.
Yet, the company reports earnings on Oct. 10, and Goldman Sachs analyst Bonnie Herzog told clients:
“We expect a slight top & bottom-line beat, driven by strong underlying momentum internationally, and healthy demand for Frito-Lay North America and PepsiCo North America as consumer elasticities remain resilient despite the challenging macro environment.”

PepsiCo also found support near key technical levels, which should halt the nearly 20% drawdown. Weekly trendline support is near $160, which is in various highs and lows set since 2021. And on top of that, PepsiCo’s 200-week moving average stands at $158.18, and last week’s dip below the critical level elicited support, and the stock closed the week above it.

Finally, PepsiCo’s weekly RSI (the black line at the bottom) ended last week at its lowest level since the 2020 pandemic-induced crash. With oversold conditions often precursors to reversals, it’s another indicator that favours the bulls in the weeks ahead.

Is PepsiCo ready to rally, or will the stock lose even more weight before sentiment shifts?


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