New Pepsi Price Target After $4 Billion Investment News

My readers know that I am a sucker for activist investment. I love, love, love learning that one of my stocks has been infiltrated by an activist investor with a track record. That was not the case on Tuesday morning. 

I am currently long both PepsiCo PEP and Coca-Cola KO as a result of some pre-opening style "day trading" as a response to Tuesday morning's news. Long-time readers know that I have often been critical of PepsiCo's balance sheet. Honestly, it's a mess. Apparently, I am not the only one who noticed.

The News

At 07:22 a.m. ET on Tuesday, The Wall Street Journal reported (at the top of its web page) that activist investor Elliott Investment Management had built an approximate $4 billion stake in PepsiCo with the intent to make changes in order to boost the firm's share price. I added to Coca Cola to my short-term trade just to see if the algos would try to move them both. Coke has a much stronger balance sheet, and I would not expect that name to be targeted by activist investors just because they compete with Pepsi.

As of Friday night's close, PepsiCo shares were up 16.5% since the late June lows, but still down 17.8% over 13 months. KO is down 6.2% over 12 months but is up 13.5% from its 2025 low. I would think that after I am done day-trading these names, I will be flat Coke (flat Coke, get it?) and remain long some Pepsi in order to be an active shareholder while Elliott works some magic.

Over recent quarters, PepsiCo's has seen its soft-drink business lose market share. Keurig Dr. Pepper's KDP Dr. Pepper had caught Pepsi, forcing a tie for second place in the soda wars behind Coca-Cola with Coke's Sprite not very far behind. PepsiCo's food and snack business, which had been a growth engine for the company and accounts for almost 60% of all revenue, has also come under recent pressure. The North American food business specifically has seen slowing sales for each quarter since late 2022.

Readers with long memories will recall, and this is cited in the Journal piece, that about 10 years ago, Nelson Peltz (of him, your author is a huge fan) of Trian Fund Management pushed PepsiCo to merge with Mondelez MDLZ and spin off the beverage business. Is that an idea that Elliott could wake up? We have not heard anything regarding Elliott's plans except that it plans to make an impact.

Is there some synergy there? Maybe. Never heard of Mondelez? Well, maybe you've heard of Oreo, Chips Ahoy, Ritz, Tate's, Cadbury, Swedish Fish, Honey Maid, Nutter Butter, Teddy Grahams and Trident? 

What could PepsiCo bring to that table? Fritos, Lay's Cheetos, Doritos, Tostitos and Quaker Oats. Sounds like a match. That's just me thinking, but Nelson Peltz thought of it first and it is not a crazy idea.

The Chart​

Looking at PEP, we have two different bullish technical patterns in play. ​There is a double-bottom pattern of bullish reversal with a pivot down around $133. That's not all that interesting to me. More interesting is the inverse head-and-shoulders pattern of bullish reversal with a $147 neckline/pivot. The double bottom just turns the inverse head-and-shoulders into a two-headed monster.

Relative strength is better than neutral. That said, the daily MACD came into Tuesday with the 26-day EMA above the 12-day EMA and with the histogram of the nine-day EMA in negative territory. Something tells me that this daily MACD will look a bit different in 24 hours.

PepsiCo (PEP)

Target Price: $180

Pivot: $147

Add: Down to the 200-day SMA (currently $145)

Panic: Elliott Management exit from the stock, or an 8% loss versus principal

At the time of publication, Guifoyle was long PEP and KO equity.