Legg Mason has raised its full year EPS estimate foe PepsiCo, after the soft drink and snack producer reported comparable 1Q EPS of US$0.52 this week, above market estiates, on stronger than expected operating income growth.

Mark Swartzberg, Legg Mason's drinks analyst said: "We are lifting our full-year EPS estimate to US$2.65 for the added 1Q earnings, increased profit estimates for PepsiCo International and Quaker Foods North America, and a sustained reduction in estimated effective taxes.  Our estimates are for PepsiCo on a 53-week basis and reflect approximately $0.04 of EPS for a 53rd week of reportable EPS in 2005."

He added: "PepsiCo's larger portfolio strategy is working and is expected to continue delivering high single digit operating income growth for the whole of PepsiCo."
Legg Mason recommened a "Hold" rating on the shares.

"We believe the shares are likely to perform broadly in-line with the market over the next 12 months.  PepsiCo's portfolio of businesses should continue driving top-of-sector growth and consistency, and we believe valuation reflects general market expectations of such performance," Swartzberg said.