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On Tuesday, UBS analysts revised their outlook on Campbell Soup stock (NASDAQ: NYSE:CPB), reducing the price target to $33 from the previous $36 while maintaining a Sell rating. The adjustment follows Campbell Soup’s recent third-quarter results, which exceeded expectations and reiterated their fiscal year 2025 outlook, excluding the effects of tariffs. The stock, currently trading near its 52-week low of $32.95, has seen revenue growth of 8.65% over the last twelve months. Despite the positive earnings report, the stock is only slightly outperforming the Consumer Staples Select Sector SPDR Fund (XLP), which is down 0.7%. InvestingPro analysis suggests the stock may be undervalued at current levels.
The UBS team noted that although Campbell Soup’s earnings and outlook were stronger, many investors remain uncertain about the company’s future trajectory. The analysts expressed concerns about fiscal year 2026, citing ongoing challenges in the snacks category, increased investments in marketing and incentive compensation, and tariff uncertainties as potential hurdles. Despite these concerns, InvestingPro data shows the company maintains a FAIR financial health score and offers a substantial 4.55% dividend yield, having maintained dividend payments for 55 consecutive years.
In their commentary, the analysts highlighted the difficulties in forecasting earnings per share growth for fiscal year 2026, suggesting that market expectations might decrease as the year progresses. Despite the stock’s attractive valuation compared to its packaged food peers, UBS believes that valuation alone is insufficient to drive positive momentum for the company.
The analysts concluded that the stock might remain under pressure until there is more clarity on Campbell Soup’s long-term strategic direction and performance. Investors and market participants will likely continue to monitor the company’s efforts to address these challenges in the coming quarters.
In other recent news, Campbell Soup reported third-quarter earnings per share (EPS) of $0.73, which exceeded both Stifel’s and consensus estimates by $0.08, despite a 3% decline. The Meals and Beverages division showed strong market share gains, but the Snacks division’s recovery is slower than expected, affecting overall performance. Analysts from Stifel, Barclays (LON:BARC), BofA Securities, and Citi have all revised their price targets for Campbell Soup, citing various challenges. Stifel lowered its target to $38, maintaining a Hold rating, while Barclays cut its target to $35 with an Underweight rating, pointing to fiscal year 2026 headwinds.
BofA Securities reduced their price target to $33, retaining an Underperform rating, due to shipment timing and tariff impacts. Citi adjusted their target to $32, maintaining a Sell rating, highlighting issues such as cost inflation and weak demand in the Snacks segment. Analysts across these firms noted the potential impact of tariffs, which could reduce EPS by $0.03 to $0.05 in the fourth quarter. The company has not fully implemented strategies to mitigate these tariff effects, which include potential increases on steel and aluminum.
Campbell Soup plans to increase marketing and selling expenses to the higher end of its sales target, yet faces challenges in the Snacks category, with Rao’s results falling short of forecasts. Barclays anticipates a more than 5% decline in EPS for fiscal year 2026, considering the outlined headwinds. BofA Securities and Citi also foresee continued pressure on earnings growth unless mitigating strategies effectively counteract these challenges.
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