PEPSICO Inc shareholders lost US$6.5 billion last quarter when the company's stock dropped following a surge in commodity prices.
The price-earnings ratio stands at the lowest in 12 years, Bloomberg News reported.
Barclays Global Investors, State Street Corp and Bank of America Corp were bolstering their investment, even as their PepsiCo shares fell 4.9 percent, the steepest quarterly decline since 2004.
These investors may be banking on the world's largest snack food maker's management to overcome soaring corn and oil prices.
PepsiCo's two-step strategy to reduce contents of snack packages and then raise prices will allow it to both mitigate higher costs and keep its customers, say Jack Russo of Edward Jones & Co and John Faucher of J.P. Morgan Securities Inc.
Known as the world's second-largest soft drink maker, PepsiCo has an advantage over others using the same technique because of its size, according to the two analysts, ranked third and fifth, respectively, by rate of return. Its portfolio of brands and 60-percent share of the salty snack market allow the company to raise prices on individual products less than rivals.
"PepsiCo is more aggressive at taking ounces out of the bag," said Faucher, who rates the company overweight. "That allows them to offset costs and they are better at doing that than pretty much anyone else in the world."
The stock may advance 21 percent over the next 12 months, based on the average analyst estimate compiled by Bloomberg News. The firm's operating margin will widen 0.5 percentage point next year, according to the analysts.
Pepsi shares gained 14 euro cents to the equivalent of US$66.81 at 9:27am in Frankfurt trading.
The New York-based company gets 60 percent of its revenue from snack sales by Frito-Lay North America, Quaker Foods North America and international units. Brands include Cheetos, Tostitos, Funyuns, Cracker Jack and Rold Gold pretzels.
PepsiCo pushed up average prices on salty snacks by 5.4 percent in the 12 weeks ending on May 18, while store brands increased 10.2 percent. PepsiCo boosted market share a quarter of a point to 60 percent.
"This snack market is probably the most challenging I've seen," said Ted Parrish, director of investments at Henssler Financial Group in Georgia.