Indra Nooyi's departure from PepsiCo Inc.'s (PEP) CEO role sent the shares lower in early trading as it adds to analyst concerns, including margin pressures and foreign exchange impact.
Deutsche Bank AG (DB) analyst Steve Powers noted the succession plan as a driver of a down day for Pepsi in his note this morning.
"Given the middling results today, the possibility of an earnings rebase for 2019, and a new, relatively unknown CEO taking the reins tomorrow, we expect the stock to modestly underperform today," he wrote.
Shares pared decline to 1.1% as of 10:44 a.m. in New York.
Big Shoes to Fill
Ramon Laguarta, the Barcelona-born businessman set to take over from Nooyi will have a difficult role to step into given Nooyi's lauded tenure at the company.
In her 12-year leadership term, net revenue grew more than 80% and the company's market capitalization increased by 68 billion dollars.
Additionally, in her time that has spanned 75 total earnings calls, she has helped reposition the company to become a major player in snack foods and healthier drinks.
"One of the things that I think you know rung through your tenure at Pepsi, and it certainly coming through loud and clear on this call, is that the focus on innovation and how that really helps differentiate the story," Cowen analyst Vivien Azer told Nooyi on the call.
To be sure, Nooyi has heaped praise on Laguarta ahead of his first day on Wednesday.
"He is a terrific executive with a long and proven track record of growing businesses," Nooyi said upon her retirement announcement in August. "He has a deep understanding of the changing preferences of consumers and other critical trends unfolding around the world."
Laguarta has been president of the company since last September and previously oversaw the company's European and sub-Saharan Africa operations.
CFO Hugh F. Johnston added this morning that he believes the transition will be smooth, but said he would be remiss in not addressing Nooyi's impact.
"I think in a lot of ways, this last quarter exemplified a lot of what Indra was all about," he told CNBC. "Delivering short-term results and at the same time investing for the long term, constantly looking for ways to do things better."
The stock's performance on Tuesday betrays market's uncertainty about the leadership transition, as Deutsche's analysts suggested, and is reacting to the loss of the innovative CEO that both executives and analysts have given so much praise.