Macquarie Upgrades PepsiCo To Outperform, Prefers Over Coca-Cola

As previously reported, Macquarie analyst Caroline Levy upgraded PepsiCo (PEP) to Outperform from Neutral and raised her price target on the stock to $126 from $107, stating that new CEO Ramon Laguarta "moved decisively" to reset for sustained 4%-6% sales growth by stepping up marketing and capital spending.

Levy, who said she is most encouraged by Pepsi's commitment to driving impulse purchases, said she believes the company can deliver 5% average annual sales growth over the next three years given higher investments in advertising, sales, and distribution of its brands. She also recommends overweighting PepsiCo shares versus Coca-Cola (KO), on which she keeps a Neutral rating.