Friday, December 3, 2010

Credit Agricole Ups Pepsi to Buy

. Friday, December 3, 2010

By Teresa Rivas

On the heels of PepsiCo’s (PEP) announcement that it plans to buy Russian dairy and beverage giant Wimm-Bill-Dann (WBD), Credit Agricole Securities analyst Caroline Levy upgraded the stock to Buy, with an $80 price target.

Levy’s said the deal will “mark an inflection point in Pepsi’s top-line growth prospects. Unlike the bottler deals, this deal is sales-growth additive, boosting Pepsi’s role in Russia’s fast-growing dairy sector.”

After the U.S., Russia will muscle out Mexico to become Pepsi’s second largest market, Levy wrote in a research note today, while Europe sales will pop 20%.

However, there are other things to like about the stock as well: Levy senses that Pepsi’s new sweetener-enhancing technology is likely not far off, which could certainly boost sales. She believes that the company can sustain 11% earnings per share growth over the next 3-5 years, while share buybacks likely to ramp back up in the second half of 2011.

Disclosure: None





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