On Tuesday, Stifel maintained a Hold rating for Campbell Soup Company stock (NYSE:CPB) with a set price target of $45.00. The firm's analysis followed Campbell's recent announcement of finalizing the acquisition of Sovos Brands, a deal valued at approximately $2.7 billion.
The transaction, based on Stifel's 2024 estimates, reflects a 16 times EV/EBITDA multiple. Sovos Brands, a company recognized for its fast growth, particularly with the Rao's brand in sauces and related categories, reported over $1 billion in revenue for the year 2023.
The acquisition of Sovos is expected to contribute over one percentage point to Campbell's organic revenue growth profile. However, Stifel has adjusted its fiscal year 2024 and 2025 estimates for Campbell Soup to reflect the initial dilution that the transaction is anticipated to cause. The firm's analyst cited the potential growth from Sovos but also indicated the need to account for the financial impact of integrating the new business.
Campbell Soup's strategic move to acquire Sovos Brands is seen as a significant step in expanding its product portfolio and market presence in the food industry. Sovos Brands has established a strong foothold with its Rao's brand, which has become a key player in the sauce segment and has successfully branched out into related product categories.
The reiteration of the $45 price target by Stifel signals a steady outlook for Campbell Soup's stock value following the acquisition. The firm's decision to maintain a Hold rating suggests a cautious but neutral perspective on the company's near-term financial performance as it integrates Sovos Brands into its operations.
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