Bank of America downgraded Pepsi (PEP) to Neutral from Buy, Schwab Network reported today. The bank predicts that the growth of the food-and-beverage giant's Frito-Lay North America unit will remain below its long-term trend this year.

Bank of America Expects PEP to Grow Slowly

Although Pepsi's international businesses are growing and performing well, they will not offset the decelerating growth of the Frito-Lay North America unit, the bank believes.

Consequently, the bank does not expect Pepsi's earnings per share to increase more than a few percentage points in either 2025 or 2026. Moreover, Pepsi is unlikely to beat analysts' average revenue estimates going forward, according to Bank of America.

Estimates and Price Target Lowered

Bank of America cut its fiscal 2026 earnings per share estimate for PEP to $8.70 from $8.85 and reduced its FY27 EPS outlook to $9.27 from $9.45.

The bank's price target on PEP stock sank to $155 from $185.

The Recent Price Action of PEP Stock

In the last month, the shares have dropped 2.5%, while they are flat in the last three months and have fallen 13% in the preceding 12 months.

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Disclosure: None. This article is originally published at Insider Monkey.