Susquehanna Downgrades PepsiCo, Sees 'Little' Activism Or M&A Impact In Future

In a report published Monday, Susquehanna analyst Pablo Zuanic downgraded the rating on

from Positive to Neutral, while reducing the price target from $116 to $100, on reduced likelihood of a split or a takeout. Analyst Pablo Zuanic pointed out that, following the completion of the deal with

and the recent management changes and commentary at PepsiCo, a split scenario or any kind of portfolio re-engineering appears unlikely. Zuanic added, "…we think the probability of a split at PepsiCo is significantly lower (due to improving top-line and margin performance, recent management changes, and what we see as a "contained" Nelson Peltz), and also think that a hypothetical joint bid from 3G/BUD is at least three years out (as 3G digests KRFT)." In the report Susquehanna noted, "Although the fundamentals of PEP remain a tad above the unexciting consumer staples group average, they are not adequate based on valuation comps to justify a Positive rating." The US IRI scanner data providing details on growth and share trends and a change in forex rates could boost PepsiCo's future performance. "But the bigger catalysts would be external (role of activists and private equity as the FMCG industry further consolidates)," the report added. Zuanic also mentioned that, after the recent revisions to the bottling agreements between PepsiCo and

, "we are now actually less convinced Pepsi drinks is a target for BUD."