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On Thursday, RBC Capital Markets adjusted its outlook on Campbell Soup (NYSE:CPB) stock (NASDAQ:CPB), decreasing the price target to $44 from the previous $51, while maintaining a Sector Perform rating. The revision follows the company’s recent financial performance in its second fiscal quarter, particularly within its Snacks division, which did not meet Wall Street’s expectations. This shortfall led to a reduction in the company’s full-year guidance. According to InvestingPro data, six analysts have recently revised their earnings expectations downward, while the stock currently trades near its 52-week low of $36.92.
Nik Modi, an analyst at RBC Capital Markets, noted that the challenges faced by Campbell Soup were anticipated and that the company’s decision to lower its guidance was a prudent move to address its current issues head-on. Modi stated that despite the stock’s attractive valuation compared to its peers and historical standards, there is still significant work to be done for the stock to recover. The company maintains a P/E ratio of 20.74 and offers a dividend yield of 3.98%, with InvestingPro highlighting Campbell’s impressive 55-year streak of consecutive dividend payments.
Campbell Soup has been navigating a tough market environment, with macroeconomic and consumer challenges impacting its performance. The company’s recent financial results reflect these difficulties, and the lowered guidance suggests that management is recalibrating its expectations in light of the ongoing headwinds.
The RBC Capital Markets analyst emphasized the need for Campbell Soup to focus on improving its performance. The reduction in the price target is based on a discounted cash flow (DCF) analysis, which takes into account the company’s current economic challenges and the effort required to overcome them.
The stock’s Sector Perform rating indicates that RBC Capital Markets views Campbell Soup as performing in line with the expectations for companies in the same sector. This rating remains unchanged despite the lowered price target, suggesting that the firm believes the company has the potential to stabilize and improve its performance in the future.
In other recent news, Campbell Soup has faced a series of analyst downgrades and price target reductions following its second-quarter fiscal year 2025 results. The company reported earnings per share (EPS) of $0.74, marking an 8% decline year-over-year, though slightly surpassing some analysts’ expectations. Despite this, Campbell Soup revised its full-year 2025 guidance downward, anticipating organic sales to range between a 2% decline to remaining flat and EPS to decrease by 4% to 1%. Evercore ISI, Citi, JPMorgan, Jefferies, and Stifel all adjusted their price targets for Campbell Soup, with new targets ranging from $37 to $46, reflecting concerns over the company’s performance, especially in the Snacks segment. Citi and JPMorgan downgraded their ratings, with Citi maintaining a Sell rating and JPMorgan lowering its rating from Overweight to Neutral.
The challenges in the Snacks division were a common theme, with analysts noting continued sales and margin pressure, leading to revised expectations. Evercore ISI highlighted contrasting trends within Campbell’s product segments, noting unexpected strength in broth sales but skepticism about its sustainability. Jefferies and Stifel maintained Hold ratings, acknowledging the company’s efforts to address these issues but advising caution until clearer improvements are evident. Investors are keeping a close eye on Campbell Soup’s strategies to stabilize its Snacks division and align with revised financial targets.
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