01:47 PM EDT, 06/24/2025 (MT Newswires) -- PepsiCo's ( PEP ) revenue is likely to remain under pressure this year as consumers turn away from snacks to more healthier options amid economic headwinds, RBC Capital Markets said in a client note Tuesday.

Weakness in the beverage and snacks company's domestic business, particularly in the Frito Lay segment, has hurt overall revenue, the brokerage said.

Previously viewed as the "crown jewel" of PepsiCo's ( PEP ) portfolio, Frito Lay sales have been hit as consumers shifted to healthier categories from snacks, which are likely still viewed as expensive, according to RBC analysts, citing data from consumer data company Numerator.

"We see sustained top-line pressure this year and expect things to get worse before they get better," RBC Co-Head of Global Consumer and Retail Research Nik Modi wrote. "For investors to have confidence in (Pepsi's) outlook, we believe we need to have greater visibility into the domestic topline trajectory and the

single biggest unlock is the recovery of snacking volumes."

In April, PepsiCo ( PEP ) lowered its fiscal 2025 earnings outlook amid anticipated cost pressures. At the time, the company said it expected a 3% decline in full-year core per-share earnings, while continuing to see organic revenue growth in the low-single-digit range.

Analysts polled by FactSet currently project non-GAAP EPS to decline to $7.89 from last year's $8.16, while reported sales are forecast to improve to $91.87 billion from $91.85 billion in 2024. RBC is projecting adjusted EPS of $7.92 on sales of $91.46 billion for 2025.

PepsiCo ( PEP ) shares tumbled more than 30% during the last two years, according to RBC. While the brokerage views PepsiCo ( PEP ) as "a great company with great brands," Modi said "it's too early to call the bottom."

RBC maintained a sector perform rating on the stock with a price target of $148.

Price: 130.53, Change: +1.44, Percent Change: +1.11