Ahead of the Bell: Pepsi Bottling Group upgraded

With the stock trading at two-year lows, John Faucher raised his rating to "Neutral" from "Underweight." He still expects rising costs and competition among soft drink makers to put pressure on PBG's profits, but he expects profits to grow modestly and said Wall Street is expecting less.

Shares of PepsiCo, Coca-Cola Co. and Coca-Cola Enterprises are trading at much higher levels relative to their profits, he said.

The Somers, N.Y., company's shares are down 25.9 percent since PBG reported its fourth-quarter results on Jan. 28. The stock fell to $28.41 Thursday, which was its lowest price since January 2006, before closing at $29.12.

Faucher pared his profit estimate to $2.33 per share from $2.36, because he believes lower sales in the U.S. will cut into the company's margins. PBG has forecast a profit of $2.30 to $2.38 per share, and on average, Thomson Financial reports that analysts expect $2.36 per share.