Q3 Follow-Up: Pepsi "Pop" Abroad, but "Flat" NA Results; EPS Risk Confirmed with Guide-Down

Q3 organic sales growth (OSG) progress with in-line Q3 EPS from PepsiCo drove a relief rally in the stock despite a FY26 EPS guidance cut, with a low bar for the stock. Q3 was the tale of two regions yet again: strong 8% international OSG, ~140 bps above consensus, but NA OSG only -0.3% yoy and ~40 bps below consensus. Two big takeaways: (1) OSG is slowly improving, with the 3.1% increase representing Pepsi's best result since Q4 2023; (2) our concerns about EPS risk were confirmed with Pepsi cutting FY26 constant-currency EPS growth guidance by 250 bps at the midpoint. We remain Equal-weight, acknowledging OSG progress, but expect 2027 to be a rebase year with only flat (+0.5%) modeled EPS growth given limited pricing, a worsening commodity environment, and the need for reinvestment in NA. Our FY26/27 EPS estimates move down by 0.6%/2.0% to $8.42/$8.46, and we lower our PT to $145 from $160. We prefer OW-rated KO/MNST/KDP in beverages.