PepsiCo Bottomed Out—Time to Chugalug This Blue-Chip Buy?

Key Points

• PepsiCo's Q2 release serves as a catalyst for higher share prices, signaling a potential bottom for the market and a potential for long-term share price increases.
• The dividend is historically high, above 4%, and reliable for long-term investors.
• The analysts and institutional trends align with bottoming and rebounding, providing lift in the back half of 2025. 

PepsiCo’s NASDAQ: PEP stock price sold off for a reason, but the sell-off overextended, and a buying opportunity is at hand. Already struggling with sluggish growth, recall-related issues, and macroeconomic concerns, tariffs and consumer headwinds further pushed the stock price to historical lows.

PepsiCo's value is at the extreme low end of the range, and the yield is at the high end, offering a generational buying opportunity. 

Yielding well over 4% in mid-July, PepsiCo stock is as attractive as it has ever been and has a substantial upside for investors willing to load up and ride the rebound. In the long term, PepsiCo's fundamentals suggest that this stock could rise by 40% to retest the high end of its trading range without considering the addition of growth.

Adding revenue and earnings growth into the equation, PepsiCo stock will likely reach new all-time highs; the only question is when. That is the rub for traders; this is a buy-and-hold income stock play with a two- to five-year time horizon. Investors with the patience to hold this consumer staples winner for longer will reap even greater rewards. 

PepsiCo’s Technical Outlook: Institutions Bought This Dip

PepsiCo’s two-year stock price drop was like watching a train wreck slowly unfold. However, as the stock price declined, the volume rose, indicating that only a small portion of the market was selling, while the rest was buying as the share prices fell. The obvious buyers are institutions, and the data tracked by MarketBeat supports this idea.

Institutions bought PepsiCo stock on balance in Q1 and Q2 of 2025, ramping their activity toward the quarter's end and carrying over strongly into the first two weeks of Q3.

Assuming they remain bullish in Q3, which they likely will due to the valuation/dividend proposition and Q2 results, PepsiCo’s stock price will have a strong institutional tailwind in H2 2025. 

Likewise, the analysts' sentiment trends align with the price correction and a robust outlook for a rebound. They include a softening of sentiment from Moderate Buy to Hold and a reduction in the consensus price target; however, the price correction is rebounding from the low-end target, and the consensus forecasts a 17% price increase by the year’s end.

A move to $158 would align the market with a critical resistance target and potential pivot point, and it would only need a catalyst to drive it to new highs. 

PepsiCo Provides Catalyst With Q2 Results and Guidance Update 

PepsiCo’s Q2 earnings results serve as a catalyst for the market, with revenue growing 1% to $22.73 billion and outperforming the consensus estimate by 190 basis points. North American Foods and APAC were the only areas of weakness, contracting by 2% and remaining flat, respectively.

Meanwhile, organically, PepsiCo Beverage grew by 1%, International Beverage by 5%, Europe, Middle East, and Africa by 7%, and Latin America by 6%.

Margin is another area of strength. The company continues to experience margin pressures but is navigating the environment well, producing $2.12 in adjusted earnings, approximately 400 basis points above the consensus figure.

The critical details are that full-year guidance for revenue, earnings, and capital was reaffirmed, with first-half momentum expected to lead to second-half strength. Within those details is a forecast for increased capital returns, representing a 5% increase to the dividend and steady buybacks.

Buybacks are forecasted to reach $1 billion by year’s end and reduce the share count incrementally.

PepsiCo Advances Following Q2 Release and Guidance Update

The initial market response to PepsiCo’s Q2 release is bullish. The market rose by over 3% in premarket trading to confirm support at the 30-day exponential moving average (EMA). Support at the 30-day EMA is critical, as it represents short-term traders, value hunters, and buy-and-hold income investors, with potential for further gains.

The indicators, including MACD and stochastic, are bullish and poised to send a strong signal at the open. Assuming the market follows through on this, PEP stock should continue the reversal process and begin trending higher before the start of Q4.