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PepsiCo shares are trading near a 52 week low, but that depressed price was not enough to persuade JP Morgan that the stock offers an attractive buying opportunity. Instead, the firm has turned more cautious as concerns build around the company’s North American business.

JP Morgan analyst Andrea Teixeria downgraded PepsiCo to Neutral from Overweight on Tuesday. She also reduced her profit estimates for fiscal year 2027 and fiscal year 2028, adding another setback for a stock already under pressure.

The downgrade signals concern that PepsiCo’s coming earnings report could be difficult for investors to digest. The company had promised stronger financial results during the second half of 2026 through cost cuts and better product execution.

Teixeria said, "The upcoming quarter may still show a decent top- and bottom-line, especially with International likely performing well on favorable weather tailwinds and a strong FIFA World Cup. However, excluding these non-recurring tailwinds, judging from the tracked channel and recent price increase announcements, we believe trends in North America have likely continued to underperform management expectations."

That assessment leaves PepsiCo facing a sharp divide between potentially solid international results and continued weakness closer to home. Favorable weather and the FIFA World Cup may help the quarter, but Teixeria characterized those factors as temporary.

The analyst also pointed to PepsiCo’s attempts to revive its Frito Lay North America salty snacks business. Those measures have included ingredient reformulation, packaging changes, increased spending, and lower prices, yet Teixeria said performance has remained lackluster.

She said the recovery appears to have stalled after 1Q26. With new transportation pressures also emerging, Teixeria suspects PepsiCo may need to depend more heavily on productivity during 4Q26 to meet its EPS guidance at the low end of the 5% to 7% range.

Her outlook also reflects difficulty forecasting sequential improvement in North American trends through the end of the year. That concern matters because weakness in the region was already visible in PepsiCo’s second quarter earnings release in July.

PepsiCo reported second quarter revenue of $24.2 billion, an increase of 6.4% from the prior year and above Wall Street expectations. Adjusted earnings per share reached $2.20, roughly matching expectations but falling slightly below some analyst estimates.

The more troubling figures came from North America. Snack volumes were flat, while beverage volumes declined 4% as consumers reduced discretionary purchases, leaving two major parts of the company’s domestic operation struggling to generate volume growth.

PepsiCo has cut prices on brands including Lay’s and Doritos in an effort to win shoppers back. Those reductions have placed pressure on the company’s pricing power and margins, complicating efforts to improve financial performance through stronger product execution.

Core operating profit margins declined 40 basis points from the prior year during the quarter. The margin contraction came as management continued trying to balance lower prices with the need to restore demand among cautious consumers.

Management nevertheless maintained its full year outlook. PepsiCo continued to forecast organic revenue growth of 2% to 4% and core constant currency EPS growth of 4% to 6%.

Executives also warned that the North American recovery could take longer than previously hoped. They said input cost inflation could increase during the second half of the year, adding another potential obstacle as the company works toward its guidance.

The stock’s performance shows how heavily those concerns have weighed on investors. PepsiCo shares are down 11.2% this year, while rival Coca-Cola has gained 24%, creating a stark gap between the two beverage giants.

For investors looking at the 52 week low as a bargain, JP Morgan’s downgrade offers a blunt counterargument. The firm’s concern is not simply where the shares trade today, but whether PepsiCo can revive North American demand while protecting margins and delivering its promised earnings growth.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.