Shares of PepsiCo (PEP, Financials) fell 2.36% to $143.28 as of 1:45 p.m. Eastern Time on Tuesday after Bank of America lowered its rating on the stock to "neutral" from "buy," citing slowing growth at the company's core North American units.

In a note to clients, analysts led by Bryan Spillane said PepsiCo's Frito-Lay North America segment is seeing a decline in volume, driven by price increases that have outpaced wage gains. The report forecast that a meaningful recovery in volume—defined as growth exceeding 100 basis points—is unlikely before fiscal 2027.

PepsiCo's North American beverage business is also underperforming, according to the analysts. They attributed market share losses to a narrower product portfolio and more aggressive marketing efforts by competitors. Although PepsiCo's international divisions are generating sales and profit growth, BofA said the gains are insufficient to offset domestic weaknesses.

The report added that PepsiCo's second-largest market, Mexico—which accounts for roughly 8% of total company sales—is being negatively impacted by geopolitical uncertainty and tariff threats. U.S. President Donald Trump has floated broad tariff measures that could affect trade with both allies and rivals, potentially affecting consumer confidence in the region.

BofA cut its 12-month price target on PepsiCo to $155 from $185 and warned that earnings per share growth is likely to remain in the low single digits through 2025 and 2026.

While the broader market rotation into consumer staples stocks may provide some valuation support, the analysts said they see limited potential for a significant re-rating of the stock unless sales and profit growth align more closely with higher-valued peers in the large-cap consumer goods segment.

PepsiCo is expected to report its next quarterly earnings on April 24.