Campbell Soup stock downgraded to Hold by Argus on volume concerns

Investing.com - Argus downgraded Campbell Soup (NASDAQ:CPB) stock rating from Buy to Hold on Friday, citing persistent volume challenges despite the company’s price increase strategy. The stock, which has declined 33% year-to-date and is trading near its 52-week low of $32.08, shows signs of being oversold according to InvestingPro technical indicators.

The research firm noted that Campbell’s volume has declined or remained flat year over year in six of the past eight quarters, even as the company has slowed its price hikes that were implemented during peak inflation periods. Despite these challenges, the company maintains a solid 8.65% revenue growth and offers a notable 4.84% dividend yield, having maintained dividend payments for 55 consecutive years.

Argus pointed to changing consumer behavior as a key factor in the downgrade, observing that shoppers pressured by years of stubborn inflation and an uncertain economic environment have become more cautious with spending and are trading down to less expensive private-label products.

The firm also highlighted management’s recent struggles with margins as Campbell faces its own increasing input costs combined with lower sales volumes, creating additional pressure on the company’s financial performance.

Despite the downgrade, Argus expressed a favorable view of Campbell’s Sovos acquisition, particularly noting the popular Rao’s brand and its potential to strengthen the company’s Meals & Beverages segment.

In other recent news, Campbell Soup has seen a series of adjustments in analyst ratings and price targets. TD Cowen lowered its price target for Campbell Soup to $33, citing concerns about the company’s pricing power and weak demand in its snacks business, while maintaining a Hold rating. The firm also reduced its fiscal year 2026 earnings per share estimate to $2.75, below the consensus estimate of $2.85. DA Davidson cut its price target to $34 from $39, maintaining a Neutral rating, highlighting a "lower quality earnings beat" and ongoing pressures in the snacks portfolio. Bernstein SocGen adjusted its price target to $44, maintaining an Outperform rating, noting Campbell’s soup segment outperformed expectations despite weaknesses in the snacking category. RBC Capital also lowered its price target to $38, maintaining a Sector Perform rating, following mixed fiscal third-quarter results with challenges in the Snacks division. These developments reflect ongoing concerns about Campbell Soup’s ability to navigate market pressures and economic factors, such as tariffs and consumer spending shifts.

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