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RBC maintains $47 stock PT on Campbell Soup amid mixed trends

Published 2024-06-07, 10:16 a/m

On Friday, RBC (TSX:RY) Capital maintained its Sector Perform rating on Campbell Soup (NYSE:CPB) with a consistent price target of $47.00. The firm's stance comes after evaluating various aspects of the company's performance, including the recent acquisition of Sovos Brands. The data from Sovos Brands showed promising signs, but the Snacks division experienced a slowdown in the third fiscal quarter due to decelerating category trends.

Campbell Soup's Meals & Beverages (M&B) segment, however, displayed positive volume growth for the first time in several years. This was attributed to the robust performance of the U.S. soup sector and unmeasured channels, which provided a slight advantage. Despite certain areas of weakness, these gains mark a significant development for the M&B segment.

Looking forward, RBC Capital expressed a positive outlook regarding the potential impact of Sovos Brands and the anticipated continued success of key brands within the Snacks segment. Nevertheless, the firm noted concerns about the delayed consumer recovery and the resulting downward adjustment of Campbell Soup's fiscal year 2024 guidance.

In summary, while there are elements within Campbell Soup's operations that suggest potential for growth, the overall cautious consumer environment and revised company forecasts contribute to RBC Capital's decision to retain the $47 price target and Sector Perform rating.

In other recent news, Campbell Soup Company (NYSE:CPB) reported stable organic net sales and significant growth in adjusted EBIT and EPS in its third-quarter fiscal 2024 earnings call. Wells Fargo (NYSE:WFC) has updated its stance on the company, raising the stock's price target to $47.00 based on higher estimates. The firm has maintained an Equal Weight rating on the shares.

Despite a slight decline in the Snacks business's organic net sales, Campbell Soup remains optimistic about the long-term growth potential of its snacking portfolio. The company's recent acquisition of Sovos Brands has positively contributed to the expansion, with the Meals & Beverages division also showing comparable organic net sales and volume growth.

Furthermore, Campbell Soup has made investments to optimize the supply chain and reduce costs, including a $230 million investment and a reduction of 415 roles over two years. The company updated its full-year guidance, expecting reported net sales to increase approximately 3% to 4%."

InvestingPro Insights

In light of RBC Capital's analysis, additional insights from InvestingPro can provide a broader context for Campbell Soup's financial health and future prospects. With a market cap of 13.0 billion USD and a P/E ratio of 17.58, Campbell Soup appears to be valued in line with industry standards. Notably, the company's adjusted P/E ratio for the last twelve months as of Q3 2024 stands at a more attractive 14.62. This could suggest that the company is potentially undervalued based on its earnings.

InvestingPro Tips highlight that Campbell Soup has maintained dividend payments for 54 consecutive years, reflecting a strong commitment to shareholder returns. Additionally, analysts predict the company will be profitable this year, which aligns with the positive volume growth in the Meals & Beverages segment mentioned by RBC Capital. On the flip side, it's worth noting that some analysts have revised their earnings downwards for the upcoming period, and short-term obligations exceed liquid assets, which could indicate potential liquidity risks.

For investors seeking to delve deeper into Campbell Soup's financials and future outlook, InvestingPro offers additional tips, including a fair value estimate of 50.84 USD, which is higher than the current analyst target of 47 USD. To explore these insights further and benefit from the full range of financial analysis, consider using the exclusive coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. There are 4 more InvestingPro Tips available for Campbell Soup, providing a comprehensive understanding of the company's performance and potential investment opportunities.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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