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Featured Student Column: Equity Research Report
Why PepsiCo’s Pullback May Be a Buying Opportunity
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Analyst: Dimitrios Kritikos*
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PepsiCo remains a fundamentally sound and resilient company despite recent market underperformance driven by macroeconomic headwinds, such as inflationary pressures, trade tariffs, and softening U.S. consumer demand. Its strengths lie in a globally recognized brand portfolio, disciplined cost management, and a consistent track record of shareholder returns through dividends and buybacks. While its North American snack division is under pressure from volume declines and shifting consumer preferences, the company is actively repositioning its offerings toward health-conscious trends and expanding in high-growth international markets. PepsiCo’s recent struggles appear more cyclical than structural, and with its long-term growth strategy intact, strong free cash flow, and undervalued stock price relative to peers, the company remains well-positioned for recovery and long-term upside.
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Recommended Articles
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JPMorgan CEO Jamie Dimon warned that markets are underestimating the risks posed by record U.S. deficits, tariffs, and global tensions, which he believes could lead to higher inflation or even stagflation. Speaking at the bank’s annual investor day, Dimon predicted S&P 500 earnings growth could fall to zero within six months, reflecting declining company guidance amid economic uncertainty. He criticized central banks for being overly complacent and said stock market valuations don’t properly account for looming economic threats.
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Klarna reported a sharp increase in its first-quarter losses for 2025, posting a $99 million net loss, more than double the $47 million loss from a year earlier, due to one-off costs like depreciation, restructuring, and share-based payments. Despite a 13% year-over-year revenue increase and growth in its user and merchant base, the Swedish fintech has paused its U.S. IPO plans amid market uncertainty tied to new U.S. tariffs. Klarna continues to emphasize its AI capabilities, citing its partnership with OpenAI and AI-driven efficiencies that have contributed to a 40% reduction in headcount.
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Moody’s recent downgrade of the U.S. credit rating from AAA to AA+ reflects growing concern over the country's long-standing fiscal irresponsibility and rising debt levels, echoing earlier moves by S&P and Fitch. While the immediate market reaction may be limited, experts warn that the long-term implications, especially rising interest rates on government debt, could strain the economy. With the U.S. now spending over $1 trillion annually on debt service, the downgrade highlights a deepening financial burden that lawmakers have historically failed to address. Although the dollar remains the world’s dominant reserve currency for now, continued political inaction may lead to broader economic consequences down the line.
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Wedbush analyst Dan Ives views the recent U.S.-China tariff pause as a bullish signal for Apple, citing its reliance on Chinese manufacturing. While the trade development offers temporary relief, Apple still faces challenges including slowing growth, high valuation, and a perceived decline in innovation. The company posted modest revenue and income gains in early 2025 but lost its market cap lead to Nvidia, raising questions about its long-term trajectory. Given these concerns, the article suggests investors remain cautious and treat Apple as a hold rather than a buy.
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