PepsiCo (PEP) is likely to report relatively in-line fiscal Q1 results and reiterate its fiscal 2024 guidance, but a “fundamental inflection” is expected in the rest of the year that could drive the stock to outperform, Morgan Stanley said Monday in a report. “We see Q1 [earnings per share] as the bottom fundamentally for the stock in our minds, and we are looking ahead to improving results in the balance of the year, as comparisons move from difficult to more benign, [short-term] pressure points dissipate, and sequential pricing deceleration dissipates,” the firm said. Morgan Stanley, which recently upgraded PepsiCo to overweight from equal-weight, also said the market has priced in too much risk following what looked like poor results particularly in Q4 of the previous fiscal year. Thus, valuation now looks “too low.” The firm said it expects the company’s organic sales growth bottoming at 2.3% in Q1 of the

PepsiCo (PEP) is likely to post “depressed” first-quarter results and reiterate its full-year outlook amid subdued expectations, though organic sales growth is projected to accelerate for the rest of the year, Morgan Stanley said in a note e-mailed Monday. The beverage and snacks company is scheduled to report March-quarter results on April 23. Morgan Stanley projects earnings at $1.51 per share and organic sales growth at 2.3%. Wall Street is looking for $1.52 and 2.5%, respectively, the brokerage said in a note. Morgan Stanley said the company could see “modest” upside to the firm’s and the Street’s organic sales outlooks, with the metric likely to see acceleration for the rest of the year as annual headwinds dissipate and comparisons ease. The brokerage expects the sequential pricing drop-off to ease in the second half of the year, while Quaker volumes are seen improving somewhat sequentially in the second quarter. “We think