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On Thursday, Citi analyst Thomas Palmer revised the price target for Campbell Soup (NASDAQ:CPB) stock, reducing it to $37 from the previous $39 while maintaining a Sell rating. Currently trading at $39.18, the stock is near its 52-week low of $36.92. According to InvestingPro data, four analysts have recently revised their earnings estimates downward. The adjustment follows Campbell Soup’s second quarter fiscal year 2025 performance, which saw the company miss its operating sales growth (OSG) targets and subsequently lower its full-year 2025 guidance for both OSG and earnings per share (EPS).
Palmer’s report expressed concerns over the declining demand in the Snacks category, which has led to increased price competition and volume pressure. Despite these challenges, InvestingPro data shows the company achieved 9.15% revenue growth in the last twelve months, with total revenue reaching $10.12 billion. Despite the double-digit reduction in the second half EPS forecast, which could indicate a conservative estimate, the midpoint of the fiscal year 2025 outlook still relies on two optimistic assumptions. The first is that Snacks OSG will stabilize in the fourth quarter of 2025 after a 3% decline in the second quarter and expected similar results in the third quarter. The second assumption is that Sovos will achieve double-digit pro forma sales growth for the fiscal year 2025, contrasting with an 8% year-over-year increase in the first half of the year and recent market growth rates that are closer to mid-single digits, excluding the slower-growing Noosa brand.
The analyst also suggested that investors should anticipate a slower rate of EPS growth beyond fiscal year 2025. This is due to the persistent demand weakness in the Snacks segment, decelerating sales growth of Sovos, and the fact that fiscal year 2025’s figures include cost savings that were realized ahead of schedule. Despite these challenges, InvestingPro analysis indicates the stock is slightly undervalued at current levels, and the company maintains a strong 3.98% dividend yield, having consistently paid dividends for 55 consecutive years. Campbell Soup’s financial performance and future projections have raised concerns at Citi, leading to the revised price target and Sell rating on the company’s stock.
In other recent news, Campbell Soup Company (NYSE:CPB) reported its second-quarter 2025 earnings, revealing an adjusted earnings per share (EPS) of $0.74, which slightly surpassed analyst expectations of $0.73. However, the company’s revenue fell short of forecasts, coming in at $2.68 billion compared to the projected $2.74 billion. This revenue miss was significant and contributed to the company’s decision to revise its full-year guidance, now expecting organic net sales to be flat or decline by 2%. The company also increased its cost savings target for the year from $90 million to $120 million. In response to these developments, Jefferies and Stifel both maintained their Hold ratings on Campbell Soup, with price targets set at $40. Jefferies noted the company’s challenges in the Snacks segment and the need for strategic adjustments to meet revised financial targets. Meanwhile, JPMorgan downgraded Campbell Soup’s stock from Overweight to Neutral, citing a reassessment of growth prospects and market valuation, and lowered the price target to $37. These recent developments highlight the ongoing challenges Campbell Soup faces, particularly in its Snacks division, as it works to stabilize performance and improve margins.
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