12:06 PM EST, 01/29/2025 (MT Newswires) -- PepsiCo ( PEP ) is expected to report modest fiscal Q4 results, with international markets leading growth but showing pockets of weakness, while the domestic business remains sluggish, RBC Capital Markets said in an earnings preview Wednesday.

The brokerage projects inline earnings per share for the company but sees limited upside, maintaining a cautious outlook for 2025 with guidance below long-term targets.

The company is undergoing a material restructuring that could help mitigate bottom-line pressures, but topline improvement remains critical for renewed investor confidence, according to the note.

PepsiCo's ( PEP ) outlook remains negative as its shares have underperformed, with rising short interest reflecting concerns over its domestic growth. Despite trading at a discount, the low valuation isn't enough to spark confidence, the report added.

Frito-Lay volumes remain weak as elevated prices weigh on snacking trends, though promotional activity is increasing. PepsiCo's ( PEP ) beverage business continues to lose market share, and RBC believes the company may need to consider refranchising its North American bottling operations.

Meanwhile, Quaker Foods is expected to grow as it laps prior supply chain issues, though overall consumption remains slow.

Despite ongoing category pressures facing Consumer Staples companies, PepsiCo ( PEP ) has some flexibility on the bottom line due to productivity initiatives. However, given its recent underperformance and poor sentiment, RBC sees justification for reinvestment support only when signs of stabilization emerge.

RBC has a sector perform rating on PepsiCo ( PEP ) with a price target of $172.

Shares of the company were up 1.2% in recent Wednesday trading.

Price: 152.00, Change: +1.75, Percent Change: +1.16