JOLTS Job Openings (Jun) 7.44M vs 7.5M Expected
On Wednesday, Jefferies analyst Rob Dickerson revised the price target for Campbell Soup (NASDAQ:CPB) shares, lowering it to $40 from the previous $42, while retaining a Hold rating on the stock. The $11.7 billion food company, currently trading at $39.24, appears slightly undervalued according to InvestingPro’s Fair Value model. The adjustment follows the company’s second-quarter results, which fell short of organic growth expectations in both segments. Additionally, the Snacks operation profit and margin significantly underperformed, missing estimates by approximately 17% and 200 basis points, respectively.
Dickerson’s comments highlighted the management’s acknowledgment of the challenges faced, particularly in the Snacks category where there has been a lack of recovery. In response to these difficulties, Campbell Soup’s management has revised their fiscal 2025 sales, EBIT, and EPS guidance downwards by roughly 3%, 5%, and 5% at the midpoint. These revisions take into account another quarter of pressured Snacks sales before an anticipated stabilization in the fourth quarter, a Snacks operating margin of approximately 13.5% compared to the previous target of over 15%, and a higher level of price investment than initially expected.
The analyst pointed out that the targets set during the September Investor Day now appear to be in need of reconsideration. The company’s financial outlook adjustment reflects the ongoing challenges within the Snacks segment and suggests that the previously laid out goals may no longer be attainable without significant changes to the company’s strategy.
Campbell Soup’s management is now faced with the task of navigating these headwinds and adjusting their approach to meet the revised targets. The current hold rating indicates that Jefferies advises investors to maintain their position in the stock until there is more clarity on the company’s ability to address these issues and improve its financial performance.
Investors in Campbell Soup will be closely monitoring the company’s efforts to stabilize the Snacks division and improve margins, as well as any strategic updates that may emerge as the company works to meet its revised financial targets. The company maintains a revenue growth of 6.34% over the last twelve months, with a P/E ratio of 20.59x. InvestingPro subscribers can access detailed financial metrics, Fair Value calculations, and expert analysis through the comprehensive Pro Research Report, available for over 1,400 US stocks including Campbell Soup.
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 exceeded the forecast of $0.73. Despite this, the company’s revenue fell short of expectations, coming in at $2.68 billion against the projected $2.74 billion. This shortfall in revenue contributed to a revision of Campbell’s full-year 2025 outlook, now anticipating organic sales to range from a 2% decline to flat, a downgrade from the previously forecasted flat to a 2% increase. Additionally, the company expects adjusted EPS to fall by 4% to 1%, adjusting downward from an earlier expectation of a 1% to 4% rise.
Stifel analysts maintained their Hold rating on Campbell Soup stock with a steady price target of $40.00, following the company’s revised projections. The analysts indicate that the guidance cut reflects a more cautious outlook for Campbell’s future performance. The company also increased its cost savings target for the year to $120 million, up from the previous target of $90 million, to mitigate some of the revenue pressure.
The acquisition of Sovos Brands contributed to a 9% increase in net sales, although organic net sales decreased by 2%. Campbell Soup’s adjusted EBIT grew by 2%, highlighting a focus on operational efficiencies. Despite these efforts, the revenue miss affected investor sentiment, leading to a notable drop in stock price.
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