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On Tuesday, RBC Capital analysts adjusted their outlook on Campbell Soup (NYSE:CPB) stock, lowering the price target to $38 from $44 while maintaining a Sector Perform rating. Currently trading at $33.65 and near its 52-week low of $32.95, the $10 billion market cap company has shown resilience in maintaining dividend payments for 55 consecutive years, as highlighted by InvestingPro. The decision follows Campbell Soup’s mixed fiscal third-quarter results, which highlighted diverging performances across its divisions.
The Meals & Beverages division showed resilience as consumers continued to opt for more home-cooked meals. However, the Snacks division faced challenges, experiencing pressure from heightened competition and shifts in consumer spending habits. These dynamics contributed to the overall mixed results for the company.
Despite a positive surprise in earnings before interest and taxes (EBIT) and earnings per share (EPS) estimates for the quarter, management anticipates reduced profitability for the full year. The lack of a significant recovery in the Snacks division and potential tariff impacts in the fourth quarter and beyond are expected to weigh on future results.
RBC Capital analysts noted that the narrative around Campbell Soup remains largely unchanged, with near-term challenges persisting. The outlook reflects ongoing concerns about the company’s ability to navigate competitive pressures and external economic factors.
The revised price target underscores the need for Campbell Soup to address these challenges to improve its financial performance and market position. According to InvestingPro’s Fair Value analysis, the stock appears undervalued at current levels. Discover more insights and detailed valuation metrics in the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Campbell Soup has reported third-quarter earnings that exceeded expectations, with an earnings per share (EPS) of $0.73, surpassing both Stifel’s and consensus estimates by $0.08. Despite the positive earnings, analysts have expressed concerns about the company’s future, particularly in its Snacks division, which is experiencing a slower recovery due to weaker category trends and increased competition. UBS, Stifel, Barclays (LON:BARC), and BofA Securities have all lowered their price targets for Campbell Soup, citing various challenges such as tariff impacts, increased marketing expenses, and ongoing headwinds in the Snacks segment.
UBS lowered the price target to $33, maintaining a Sell rating, while Barclays reduced it to $35, citing potential fiscal year 2026 challenges. Stifel adjusted its target to $38, maintaining a Hold rating, reflecting concerns over the Snacks division and anticipated tariff effects. BofA Securities also reduced its price target to $33, maintaining an Underperform rating, and highlighted shipment timing and tariff impacts as key issues.
The company has not fully mitigated potential tariff impacts, which are expected to reduce EPS by $0.03 to $0.05 in the fourth quarter. Analysts have adjusted their fiscal year 2025 and 2026 EPS estimates, with Stifel and BofA Securities revising their projections to reflect these challenges. Investors will likely continue to monitor Campbell Soup’s efforts to address these issues in the coming quarters.
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