11:45 AM EDT, 07/08/2024 (MT Newswires) -- PepsiCo ( PEP ) faces a tough choice between "stretching to hit earnings targets or taking a breather to avoid exasperating the issues by cutting costs too far" as demand in the food and beverage industry remains soft through mid-year, BofA Securities said in a note on Monday.

The company's Frito-Lay North America subsidiary increased its marketing and merchandising programs in fiscal 2024, but failed to increase volume and it will have to balance growth and earnings if trends persist, according to the note.

Pepsi Beverages North America faces company-specific challenges rather than category issues and is lagging behind peers in carbonated soft drinks due to a smaller flavor portfolio and gaps in execution, the firm added.

"The bigger question for [Pepsi Beverages North America] is whether it can reach a 'mid-teens' margin ambition if volumes don't improve," BofA said.

The investment firm cut its price objective on PepsiCo ( PEP ) to $190 from $210 and reiterated its buy rating.

Price: 162.80, Change: -1.59, Percent Change: -0.97