JOLTS Job Openings (Jun) 7.44M vs 7.5M Expected
On Thursday, JPMorgan issued a downgrade for Campbell Soup stock (NASDAQ:CPB), adjusting its rating from Overweight to Neutral and reducing the price target to $37 from the previous $48. The stock, currently trading near its 52-week low with a -5.57% year-to-date return, maintains a 3.98% dividend yield. The adjustment comes after a reassessment of the company’s growth prospects and market valuation. According to InvestingPro data, four analysts have recently revised their earnings expectations downward for the upcoming period.
The firm’s analysts pointed out that when they initially upgraded the stock last June, they anticipated unrecognized potential in several areas. They expected sales growth from the Rao’s brand, synergies following the acquisition of Rao’s, and increased margins driven by productivity in the Snacks segment. These factors were believed to contribute to Campbell Soup’s above-average growth in the coming years. Notably, the company has demonstrated consistent shareholder returns, maintaining dividend payments for 55 consecutive years - one of several key metrics available on InvestingPro.
However, the situation has evolved since the upgrade. The benefits from Rao’s sales and synergies are now well understood by the market, and the anticipated growth of the Rao’s brand has slowed down. Additionally, the anticipated margin growth in the Snacks segment has faced setbacks, potentially indefinitely, due to weaker than expected demand within the category.
Given these developments, the analysts at JPMorgan have reassessed their outlook on Campbell Soup. They now see fewer reasons for optimism and believe that the stock is currently trading at a valuation that is close to what they consider fair value. This reassessment has led to the decision to downgrade the stock rating and adjust the price target accordingly.
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 analyst forecasts. However, the company’s revenue fell short of expectations, coming in at $2.68 billion compared to the projected $2.74 billion. This led to a revision in the company’s full-year guidance, with Campbell now anticipating organic net sales to be flat or decline by 2%. The company also adjusted its expectations for EPS, projecting a decline of 4% to 1% for the year. Both Jefferies and Stifel maintained their Hold ratings on Campbell Soup, with price targets set at $40. Jefferies highlighted challenges in the Snacks segment, noting a significant underperformance in profit and margins. Campbell Soup’s management acknowledged these challenges and revised their fiscal 2025 sales, EBIT, and EPS guidance downward. Investors are keenly observing the company’s efforts to stabilize the Snacks division and improve margins in light of these developments.
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