Morgan Stanley Sees Robust Organic Sales Growth for PepsiCo

In a report published Thursday, Morgan Stanley analyst Dara Mohsenian reiterated an Overweight rating and $112.00 price target on

. In the report, Morgan Stanley noted, "PEP adj. Q4 EPS of $1.12 came in 4c ahead of our on-consensus $1.08 forecast, with strong topline/gross profit performance driving 2 cents of EPS upside vs. our forecast, with an additional 2 cent tailwind from lower net interest expense.Strong organic sales growth of +5% came in above consensus expectations in the ~3-3.5% range and MSe at 2.5%, propelled by robust +10% emerging markets growth. We view Q4 topline results as impressive(two-yr avg. growth of +4.6%), particularly with +DD% EM growth despite a difficult macro environment,as well as accelerating results at PAB (+3%).The +2.7% operating profit beat vs.consensus was driven by +27 bps of GM upside(GM up +72 bps y-o-y on productivity and effective revenue management), partially offset by 11 bps of higher SG&A as a % of sales, with marketing up +HSD% y-o-y." PepsiCo closed on Wednesday at $100.40.