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SEP 27, 2024
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Featured Student Column: Investment Research Report

Temporary Bad News Makes the Stock Cheap Temporarily!

Researcher (Analyst): Seungyun Nam, Stony Brook University
Research Assistant: Daoqi Fang, Stony Brook University
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PepsiCo's stock price has dropped due to stagnant growth in the second quarter of 2024, impacting all product sectors in both the U.S. and global markets. Investment firms like Morgan Stanley, Goldman Sachs, and Jefferies have lowered their target prices. The slowdown is linked to "snack-flation," where rising product prices have driven away customers. Although PepsiCo initially maintained stable revenue growth by raising prices, inflationary pressures have caused snack prices to hit historic highs, particularly in the U.S. potato chip market, leading to a revenue decline. In response, PepsiCo plans to lower prices to regain customers, echoing strategies used during previous recessions. Consequently, its price-to-earnings ratio has fallen below its nine-year average.
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