03:34 PM EDT, 04/08/2024 (MT Newswires) -- PepsiCo ( PEP ) is likely to post "depressed" first-quarter results and reiterate its full-year outlook amid subdued expectations, though organic sales growth is projected to accelerate for the rest of the year, Morgan Stanley said in a note e-mailed Monday.

The beverage and snacks company is scheduled to report March-quarter results on April 23. Morgan Stanley projects earnings at $1.51 per share and organic sales growth at 2.3%. Wall Street is looking for $1.52 and 2.5%, respectively, the brokerage said in a note.

Morgan Stanley said the company could see "modest" upside to the firm's and the Street's organic sales outlooks, with the metric likely to see acceleration for the rest of the year as annual headwinds dissipate and comparisons ease. The brokerage expects the sequential pricing drop-off to ease in the second half of the year, while Quaker volumes are seen improving somewhat sequentially in the second quarter.

"We think the market has priced in too much risk following what looks like poor results in (the second half) of 2023, with results not as bad as they look on the surface, and the market losing sight of a relatively solid (long-term) business model," Morgan Stanley wrote. "Said another way, we don't see the bear fundamental argument as likely to play out here, which should be good enough for stock outperformance."

The brokerage has an overweight rating on the PepsiCo ( PEP ) stock, with a $190 price target. The firm said it sees the risk and reward as positive on the first quarter and "even more so" over the next few quarters before a pending inflection.

Morgan Stanley expects corporate organic sales growth to improve sequentially to 3.3% in the ongoing quarter, 4.7% in the following quarter and 5.9% in the last quarter of the year, compared with a "depressed" comparison of 4.5% for 2024, according to the note.

In February, PepsiCo ( PEP ) said it expected fiscal 2024 adjusted EPS of at least $8.15 and organic revenue to rise by at least 4%.

"We continue to believe that investors should look ahead to a fundamental inflection (post-first quarter), and that in-line (first-quarter) results with strong expected international results amid weak US scanner data should help the market look past depressed (first-quarter) results," Morgan Stanley said.

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