Can PepsiCo Stock Trend Higher Amid Elliott’s Arrival?
Elliott Management’s recent $4 billion stake in PepsiCo represents a significant vote of confidence in the beverage and snack giant’s potential for value creation. Elliott’s thesis centers on PepsiCo’s need for a strategic overhaul, with the firm identifying potential for significant upside through operational improvements, cost optimization, and portfolio restructuring. This aggressive target reflects Elliott’s confidence in unlocking substantial shareholder value through its proven activist playbook.
Looking at Elliott’s post-2024 campaigns, six-month returns have been broadly favorable—suggesting PEP could follow a similar path.
How Elliott-backed names have fared since 2024
- Mid-May 2024 disclosure: Price at $67
- Mid-Nov 2024 price $85 → +27%
- Mid-Jun 2024 disclosure: Price at $27
- Mid-Dec 2024 price $33 → +22%
- Early Nov 2024 disclosure: Price at $205
- Early May 2025 price $205 → 0%
- Mid-Apr 2025 disclosure: Price at $26
- Early Sep 2025 price $35 → +35%
- Mid-Apr 2025 disclosure: Price at $95
- Early Sep 2025 price $135 → +43%
Median six-month gain across these five cases: 25%
Image by Pascua Theus from Pixabay
Translating the median to PepsiCo
Applying the 25% median to PepsiCo’s recent $150 share price implies a six-month target near $190. Several factors support the case:
- Operational tune-ups – Elliott consistently presses managements to cut costs, sharpen focus and lift margins; PepsiCo’s sprawling global footprint presents ample room.
- Portfolio moves – Divestitures or spin-offs (echoing the honeycomb split at HON) could surface hidden value in slower-growth brands.
- Capital discipline – Expect tougher capital-allocation hurdles, potentially larger buybacks, and a stricter return-on-investment lens.
Also see – Should You Buy PepsiCo Stock?
Of course there are risks
- Execution risk – PepsiCo’s scale and complexity mean any restructuring will be harder than at a pure-play industrial or energy company.
- Not every campaign wins – Honeywell’s flat showing illustrates that value creation can take longer—or stall—despite Elliott’s involvement.
Bottom line
Elliott’s arrival usually acts as a catalyst; its post-2024 targets show a median 25% lift in six months. If PepsiCo merely matches that pattern, the stock could climb from $150 to roughly $190. While not guaranteed, the combination of activist pressure, operational upside and constructive market sentiment makes that outcome plausible—and worth watching.
Even without considering Elliott’s influence, we believe PepsiCo’s stock is undervalued. The stock is currently trading at 19 times its trailing adjusted earnings of $7.87, which is notably lower than its four-year average price-to-earnings (P/E) ratio of 22. Although this lower multiple might be a result of concerns like thinner profit margins and previous sales challenges in North America, we still see the current price as a compelling buying opportunity. Look at PepsiCo’s Valuation Ratios dashboard for more details.
See, there always remains a meaningful risk when investing in a single, or just a handful, of stocks. Consider the Trefis High Quality (HQ) Portfolio which, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.
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