11:04 AM EDT, 09/03/2025 (MT Newswires) -- PepsiCo's ( PEP ) poor performance has triggered activist involvement, which could drive tough corrective actions and lead to earnings dilution in the near-term, RBC Capital Markets said in a note Wednesday.

Elliot Investment Management, which disclosed a $4 billion stake in PepsiCo ( PEP ) Tuesday, has urged management to unlock value for the PepsiCo Beverages North America segment through a review of brand portfolio and SKUs, evaluation of refranchising, and reinvestments to re-accelerate the core, according to the note.

However, Elliot's long-term strategy will take time for value creation, analysts wrote.

Refranchising should be prioritized despite risks of "messiness," as PepsiCo's ( PEP ) performance gap between PBNA and peers has widened in recent years, with the company hitting its pain threshold on its beverage business, RBC analysts said, citing Coca-Cola's (KO) largely refranchised business model.

For the PepsiCo Foods North America segment, Elliot recommended aligning the cost base, portfolio optimization, and pursuing investments for growth. RBC said freeing up capital and optimizing the portfolio could help build a more focused snacking portfolio poised for long-term growth.

RBC Capital Markets reiterated its sector perform rating on the stock, with a price target of $146 per share.

Price: 148.01, Change: -2.27, Percent Change: -1.51