On Wednesday, DA Davidson maintained a Neutral rating on Campbell Soup (NASDAQ:CPB) with a steady price target of $51.00. The decision follows the company's first-quarter results for fiscal year 2025, which were seen as lower quality by the firm due to a slight miss in top-line revenue.
This assessment occurred despite the positive impact from the acquisition of Sovos Brands. Campbell Soup's performance was also marked by expenses and costs that were below expectations, including marketing and selling expenses, interest expenses, and tax rates. According to InvestingPro data, the company maintains solid profitability with a gross margin of 31.3% and has consistently paid dividends for 54 consecutive years.
The analyst noted that while Campbell Soup's recent financial release anticipates improved share and sales in the second quarter, these projections are already factored into DA Davidson's forecasts. The firm's stance remains cautious, aligning with the lower end of the company's full-year 2025 guidance.
The analyst highlighted that since a previous downgrade on September 27, 2024, Campbell Soup's stock has underperformed in comparison to the broader "no growth" Food & Beverage sector by approximately 500 basis points.
Campbell Soup's recent financial performance and future expectations were detailed in their earnings press release. The release suggested an optimistic outlook for the second quarter, with expected improvements in share and sales. However, the analyst from DA Davidson pointed out that their current forecasts already take these expected improvements into account, suggesting no immediate change in their position regarding the stock.
The company's financial health score from InvestingPro is rated as "FAIR," with revenue growing at 3% over the last twelve months and analysts projecting continued profitability this year.
The firm's evaluation also mentioned that despite the underperformance relative to the industry, short-term fundamental and headline risks are reasons for maintaining a sideline stance on Campbell Soup's shares. The analyst's comments reflect a conservative approach to the stock, given the company's recent results and the competitive landscape of the Food & Beverage sector.
In summary, DA Davidson's analysis of Campbell Soup's first-quarter results for fiscal year 2025 led to a reiteration of a Neutral rating and a $51.00 price target. The firm's perspective is influenced by both the modest revenue shortfall in the recent quarter and the company's underperformance in the market, as well as the potential risks that may affect the stock in the near term.
In other recent news, Campbell Soup Company (NYSE:CPB) reported its first-quarter fiscal 2025 results, which largely met expectations. The company posted adjusted earnings per share of $0.89, slightly above the consensus estimate of $0.88, and net sales rose 10% year-over-year to $2.8 billion, aligning with analyst projections. However, the company experienced a 1% decline in organic net sales.
The company's Meals & Beverages segment saw a 22% increase in net sales to $1.71 billion, primarily due to the acquisition of Sovos Brands. However, the Snacks segment revenue fell 4% to $1.07 billion, a decline attributed to the divestiture of the Pop Secret popcorn business.
In addition to these developments, Campbell reaffirmed its full-year fiscal 2025 guidance, projecting net sales growth of 9% to 11% and adjusted earnings per share between $3.12 and $3.22. The company also announced a 5% increase in its quarterly dividend to $0.39 per share, citing strong earnings, cash flow, and confidence in long-term growth potential.
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