PepsiCo Inc (NASDAQ:PEP) is expected to deliver first-quarter (Q1) results largely in line with Wall Street estimates. However, investor attention is likely to center on how escalating tensions in the Middle East could impact the company's operations and outlook.

The PepsiCo Analyst: Bank of America analyst Peter Galbo maintained a Neutral rating and price target of $173.

The PepsiCo Thesis: PepsiCo has operated in the UAE since 1962, distributing brands like Pepsi, Lay's, Aquafina and Quaker through local partners.

The company works with Dubai Refreshment Company and Abu Dhabi Refreshment Company, supported by five warehouses and two franchise manufacturing facilities across the Emirates.

Iranian strikes on the U.A.E. were reported as recently as last Tuesday, with the U.S. Embassy in Riyadh being hit by drones underscoring the broken diplomatic efforts between the U.S. and Iran.

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Also at stake is the turnaround led by PepsiCo Foods North America (PFNA), Galbo said in the note.

NielsenIQ data indicate that PFNA "improved sequentially for a second consecutive quarter," accelerating from a 0.6% decline in the fourth quarter of 2024 to 0.4% growth in the first quarter, the analyst stated. This is in line with "our +0.5% organic sales forecast," he added.

The analyst reiterated the earnings estimates for the first quarter and full year 2026 at $1.53 per share and $8.60 per share, respectively.

Highlights of PepsiCo results for the fourth quarter of 2025:

  • Revenue: $29.34 billion, beating consensus estimate of $28.98 billion
  • Earnings: $2.26 per share, topping Street expectations of $2.24 per share
  • Organic revenue growth: 2.1%, driven by higher pricing and partially offset by a decline in volumes
  • Segment performance: Beverage unit volume grew 1%, while snacks volume fell 2%

PEP Price Action: Shares of PepsiCo had declined by 1.56% to $154.29 at the time of publication on Tuesday.

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