09:51 AM EDT, 07/18/2025 (MT Newswires) -- PepsiCo ( PEP ) reported Thursday Q2 core earnings and revenue that beat analysts' expectations but "still has more work to do" in order to see US sales trends improve and "return to algorithmic growth," RBC Capital Markets said in a Friday note.

The food and beverage company "delivered a better quarter" given the low expectations and investor sentiment, RBC analysts said. Its two domestic businesses came in "modestly better" than expected, while its international business boosted organic sales by 6%, the analysts said.

PepsiCo's ( PEP ) snacking volumes improved quarter-over-quarter, with the company showcasing value improvements and increased competitiveness in most subcategories, the analysts said. The company also increased its focus on healthier snack and beverage offerings, with a plan to remove artificial ingredients by Q4 or early next year, according to the note.

However, investors remain skeptical about the company's target to reach the low end of its long-term organic sales growth target of 4% to 6% over the next few quarters, the analysts said.

PepsiCo ( PEP ) maintained its organic sales guidance of low-single-digit growth for the rest of the year, spurred by international growth and sequential improvement in its domestic business, the analysts said. The company increased its bottom-line guidance due to the easing of negative foreign exchange impacts, and earnings should be driven by productivity improvements especially in Q4, they said.

RBC maintained a sector perform rating on the stock with a $146 price target.

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