Citi bearish on Campbell Soup stock despite likely guidance reiteration

On Monday, Citi reaffirmed its Sell rating on Campbell Soup (NASDAQ:CPB) stock with a steady price target of $44.00. The financial institution anticipates the company to announce its fiscal first quarter of 2025 earnings in early December.

Citi's own operating sales growth (OSG) and earnings per share (EPS) estimates for Campbell Soup are slightly lower than the consensus of Visible Alpha, a provider of investment research data.

The analyst from Citi noted that despite the potential for a modest earnings beat due to hurricane-related stockpiling in the latter part of the quarter, the overall demand environment for Campbell Soup appears to be challenging.

This could pose risks to the company's sales and earnings as the fiscal year 2025 unfolds. However, for the first quarter, the analyst expects Campbell Soup to reiterate its guidance for the fiscal year 2025.

The report further highlighted that while the first quarter might not significantly impact Campbell Soup's stock in either an upward or downward direction, the coming months could present more pronounced risks for the company's financial performance.

The analyst's commentary suggests a cautious outlook on the stock, with no major catalysts anticipated in the near term to drive significant changes in its market value.

In other recent news, Campbell Soup Company (NYSE:CPB) has seen significant developments. The company announced the promotion of Daniel L. Poland to Executive Vice President and Chief Enterprise Transformation Officer, and the appointment of Cassandra Green as Senior Vice President and Head of Supply Chain.

Campbell Soup also sold its noosa yoghurt business to Lakeview Farms, LLC, a move aligning with its focus on core business. The company successfully raised $1.15 billion through an offering of senior unsecured notes, demonstrating strategic financial planning.

Analyst firms Bernstein SocGen Group and Argus have upgraded the stock rating, while DA Davidson downgraded it. Campbell Soup's Goldfish brand continues to be a top preferred snack among teenagers, according to a survey by Piper Sandler.

The company has projected net sales growth of approximately 9% to 11%, adjusted EBIT growth of 9% to 11%, and an increase in adjusted earnings per share of 1% to 4% for fiscal year 2025. These are among the recent developments for the company.

InvestingPro Insights

Recent data from InvestingPro provides additional context to Citi's cautious stance on Campbell Soup (NASDAQ:CPB). The company's revenue growth of 2.98% over the last twelve months as of Q4 2024 aligns with the analyst's concerns about a challenging demand environment. However, Campbell Soup maintains a solid dividend yield of 3.43%, which may appeal to income-focused investors despite the current market headwinds.

InvestingPro Tips highlight that Campbell Soup has maintained dividend payments for 54 consecutive years, demonstrating a long-standing commitment to shareholder returns. This could provide some stability to the stock, even as Citi maintains its Sell rating. Additionally, analysts predict the company will be profitable this year, which may offer some reassurance to investors concerned about the company's financial health.

It's worth noting that InvestingPro offers 5 additional tips for Campbell Soup, which could provide further insights for investors considering the stock's potential in light of Citi's analysis.

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