04:01 PM EDT, 09/30/2024 (MT Newswires) -- PepsiCo ( PEP ) continues to grapple with weak consumption trends and market share losses within its North America snacks and beverages business, posing downside risks to estimates over the next few years, BofA Securities said on Monday.

The brokerage lowered earnings per share and revenue estimates for the current and following two years amid "persistent weakness" in the category. PepsiCo's ( PEP ) price target was reduced to $185 from $190.

For 2024, the brokerage is now modeling for revenue of $92.52 billion, down from its previous estimate of $93.84 billion and below the $93.56 billion average analyst estimate on Capital IQ. Its EPS target for the ongoing year was reduced to $8 from $8.10, versus the consensus' $8.15 view.

The softness is being driven by convenience stores, which are underperforming large format stores such as grocery stores and membership clubs, according to the report. Small format locations, which also includes foodservice, account for 40% of snacks and 50% of beverage and "are now a drag," according to analyst Bryan Spillane.

"We see the channel dynamic as more cyclical than structural; time is going to be an issue," he said. For 2025, the brokerage lowered its revenue target to $95.35 billion from $97.3 billion while its EPS outlook moved to $8.45 from $8.62.

"If weakness continues, it will raise the question for potentially larger actions including restructuring, portfolio review, and/or beverage franchising," Spillane said.

A separation of snacks and beverages could be a focus of investors, according to the report. "It's reasonable for investors to expect (PepsiCo ( PEP )) to challenge assumptions; review its portfolio as it has in the past," he said.

BofA reiterated a buy rating, saying that PepsiCo ( PEP ) has strong brand franchises and a long international growth runway. The markets are also likely to reward remedial actions, it said.

Price: 170.10, Change: +0.10, Percent Change: +0.06