PepsiCo and Delta Put the US Consumer to the Test as Stocks Hit Records

Dear readers,

Wall Street is at record levels, and the stocks that depend on household spending are not. This week PepsiCo and Delta Air Lines will show whether the consumer can carry the weight that the index leaders are shedding.

Yesterday we looked at which stocks leave room for error on valuation. Consumer names pose the harder question: do customers accept the prices companies need to charge? Crypto, meanwhile, is collecting adoption news that has lately counted for more than the price itself.

PepsiCo: Cheap Is Not the Same as a Bargain

The stock sits near its 52-week low at roughly $125, down almost 9 percent year to date. PepsiCo reports before the US open on Thursday, October 8. The consensus expects adjusted earnings of about $2.30 per share on revenue of just under $25 billion.

Today RBC cut its price target to $150 from $161 and kept its Sector Perform rating. The analyst expects a weak September quarter and sees freight and logistics costs weighing on the winter quarter. Deutsche Bank had already downgraded the stock to Hold. Options traders are pricing in a move of about 3.75 percent.

The real test is pricing. PepsiCo cut prices by up to 15 percent on Lay’s and Doritos in February. In the second quarter, revenue at the North America snacks unit fell 2 percent on flat volume. Reuters reports that PepsiCo plans to raise prices again at the turn of the year, by low to mid single digits. A dividend yield of just over 4.7 percent supports the shares, but it only works as an argument if volume holds up under higher prices.

Constellation Brands shows how early the market prices in weakness. Its price-to-earnings ratio has fallen to 9.7, the lowest since June 2012. JPMorgan cut its target to $133 from $165 on weaker beer margins, and Barclays lowered its target to $122 from $132. Citi stays at Buy with a $165 target, down from $185. It expects beer volume growth of 0.7 percent against a consensus of 0.1 percent.

Procter & Gamble is the counterbet. Evercore ISI upgraded the stock to Outperform and set a $166 target. The reasoning is organic sales growth of about 3 percent in the opening quarter, against a consensus of 2 percent.

Delta: Revenue Grows, Profit Doesn’t

Delta opens the airline reporting season on Friday, October 9. The consensus stands at $1.88 per share, below management’s guidance range of $2.00 to $2.50. In the second quarter, revenue rose to $19.76 billion from $16.65 billion a year earlier. Net income still fell to $1.6 billion from $2.13 billion.

Wells Fargo cut its price target to $100 from $105 and keeps an Overweight rating. Citi confirmed its Buy rating with a $110 target but made conservative capacity plans for 2027 a condition for a lasting industry recovery. The stock trades at about $84, up a good quarter since the start of the year.

The report will say less about whether people are flying than about whether airlines can pass costs on to customers. Warning signs on the consumer side are piling up. The US economy added only 29,000 jobs in September, and the services price index rose to 74.0. Edmunds data show a record 25.5 percent of financed new-car purchases in the third quarter carried terms of 84 months or longer. The average monthly payment also hit a record, at $787.

BMW fits the pattern. The stock trades at its lowest level since 2020 because management guides to an operating margin of only 3 to 5 percent in the auto business for 2028. Many analysts cut their price targets in response.

Should investors sell immediately? Or is it worth buying PepsiCo?

The Earnings Bar Is Set High

The S&P 500 reached a record high on Tuesday, and earnings expectations are ambitious. Goldman Sachs projects third-quarter earnings growth of 27 percent per share, while FactSet sees 28.5 to 29.5 percent. According to Goldman, Micron and Nvidia deliver more than a third of that growth, and technology and energy together account for nearly 80 percent.

That explains why PepsiCo, Constellation Brands and Delta get a harder look than usual. The top of the market carries the index, while consumer stocks like PepsiCo are squeezed on both valuation and volume. The next checkpoints are JPMorgan on October 13 (consensus $5.88 per share, versus $5.07 a year earlier) and TSMC on October 15.

Price Jumps With a Reason: Power for Google, a Healthcare Deal

Constellation Energy trades more than 7 percent higher, at about $289, after a 3,590-megawatt power supply agreement with Google. Alphabet is also involved in the partnership. The stock remains well below its October 2025 high, so the jump recovers only part of the lost ground. The deal shows that AI’s appetite for reliable electricity is reaching the utilities.

Option Care Health jumped about a third to roughly $31. McKesson and the private equity firm CD&R agreed to acquire the company for about $5.8 billion, including debt.

Crypto: Adoption Over Fireworks

Bitcoin trades at about $86,200, or roughly €76,900. It is up a little over 7 percent over 30 days but still down about 31 percent over twelve months. The $87,000 mark has held as resistance, and support sits around $84,000. If Bitcoin falls below that, chart analysts see $80,000 as the next target.

Fund flows argue for caution in the short term. US Bitcoin ETFs recorded outflows of about $90 million on Monday, and only BlackRock’s IBIT took in money. Weekly inflows collapsed by almost 88 percent to $208 million. On Wednesday at 2 p.m. Eastern (8 p.m. German time), the Fed releases the minutes of its September meeting. They could set the tone if they change how the committee views the odds of an October rate hike.

Structurally, what matters more is who is buying and who is building the plumbing. Strive acquired 2,000 Bitcoin for about $169 million and now holds 29,462. Strategy bought 334 Bitcoin and holds 848,000. The Solana Foundation is launching a settlement program for institutional trading together with JPMorgan.

Securitize and LG CNS signed a memorandum of understanding on tokenized assets and stablecoins in South Korea. News like this doesn’t lift prices on its own, but it lays the foundation any next leg higher would have to stand on.

The Takeaway

By Friday we will know whether the record highs on Wall Street have support from the consumer side. PepsiCo on Thursday and Delta on Friday deliver the answer from the real economy. The test is the same in both cases: can companies raise prices without losing volume?

For investors, a low valuation or a high dividend yield is not a case by itself. Watch volume and pricing. In crypto, the Fed minutes on Wednesday and the $84,000 level are the key markers.

Best regards,
The StocksToday.com Editorial