Campbell Soup holds steady rating from TD Cowen amid mixed quarter

TD Cowen has maintained its Hold rating on Campbell Soup (NASDAQ: NYSE:CPB) with a steady price target of $47.00. The firm's assessment followed Campbell Soup's fourth-quarter performance, which aligned with expectations, though the company's fiscal year 2025 earnings per share (EPS) guidance was slightly below projections.

The Snacks division experienced a 3% decline during the quarter, leading management to moderate the forecast for recovery and margin growth for fiscal year 2025.

Campbell Soup's Meals segment, however, delivered a robust quarter, and the recently acquired Sovos business has been performing beyond expectations. Despite the mixed results, TD Cowen has decided to maintain its EPS growth projection for Campbell Soup at 4%, which is at the high end of the company's own guidance range of 1-4%. The decision reflects the potential for increased profitability driven by productivity improvements.

In other recent news, Campbell Soup reported strong fourth-quarter results for fiscal year 2024, with improved volume across divisions and double-digit growth in adjusted earnings before interest and taxes (EBIT) and earnings per share (EPS). These positive results were significantly influenced by the acquisition of Sovos Brands. The company also announced the divestiture of its Pop Secret business, signaling a strategic shift towards core brands.

In an updated shares target, Wells Fargo highlighted Campbell Soup's recovery potential and raised its price target to $49 from the previous $47 while maintaining an Equal Weight rating on the stock. This revision reflects anticipated improvements in the company's volume and mix, as well as positive momentum in the Snacks division.

For the fiscal year 2025, Campbell Soup has provided an optimistic guidance, expecting a recovery in the Snacks division, with net sales projected to grow approximately 9% to 11%, adjusted EBIT growth projected to be 9% to 11%, and adjusted earnings per share increasing 1% to 4%. Despite these positive developments, the company noted a decrease in organic net sales due to reduced reliance on partner and contract brands.

Campbell Soup remains confident in its savings and productivity roadmaps for the Snacks segment, underscored by strong performance from the Sovos Brands acquisition and growth in key brands like Goldfish.

InvestingPro Insights

As Campbell Soup (NASDAQ:CPB) navigates a period of cautious growth, real-time data from InvestingPro provides a deeper look into the company's financial health and market performance. With a market capitalization of $14.7 billion and a price-to-earnings (P/E) ratio of 26.54, Campbell Soup shows signs of a stable investment. The adjusted P/E ratio for the last twelve months, as of Q4 2024, stands at a lower 19.04, which may indicate a more favorable earnings outlook relative to the stock price.

InvestingPro Tips highlight that Campbell Soup has maintained dividend payments for 54 consecutive years, offering a dividend yield of 3.01%, which could be attractive for income-focused investors. However, it's worth noting that short-term obligations currently exceed liquid assets, which could indicate potential liquidity challenges. Additionally, while four analysts have revised their earnings estimates downwards for the upcoming period, the company remains profitable with a gross profit margin of 31.31% for the last twelve months as of Q4 2024.

For investors considering Campbell Soup's stock, there are 5 additional InvestingPro Tips available, providing further insights into the company's financials and market position. These tips, along with detailed metrics, can be found on InvestingPro's platform (https://www.investing.com/pro/CPB), and may offer valuable guidance for those looking to make an informed investment decision.

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