PepsiCo (PEP) is facing "subdued" investor sentiment ahead of its Q1 earnings report, scheduled for release on Thursday, UBS Securities said in a Sunday report.

Concerns center on the performance of PepsiCo's Frito-Lay North America unit, where tracked trends indicate little improvement, particularly in salty snacks. While some investors may be looking for a reason to be more optimistic given the current valuation, significant positive catalysts are not anticipated in the upcoming earnings release, the report said.

"Some degree of patience is required, but at this stage we think little improvement is expected/priced in and continue to believe the risk/reward skews to the upside from here," UBS said.

UBS kept its buy rating with a price target of $175.

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