UBS Warburg downgraded Pepsi Bottling (PBG) to hold from buy.
Analyst Caroline Levy says she's concerned that tough volume comparisons will make it hard for the company to grow volumes in 2003. She cut the 1% North America volume growth forecast to 0.5%, which incorporates growth of one percentage point from water, and a 0.5 percentage point from diet-colas and flavors, which is offset by a one percentage point decline in sugar-cola. Over the past three years, Levy thinks Pepsi Bottling's stock saw multiple expansion due to better than expected net revenue per case gains; in 2003, she believes pricing gains could slow to 2% or less, from 3%.
Levy is keeping her $1.43 2002 earnings per share estimate, but cut the $1.73 2003 estimate to $1.70. She maintains her $31 target.