TD Cowen analyst Robert Moskow has maintained their neutral stance on CPB stock, giving a Hold rating yesterday.
Robert Moskow has given his Hold rating due to a combination of factors, including Campbell Soup’s recent performance and future prospects. The company reported a marginal beat in its second-quarter earnings but directed expectations toward the lower end of its sales forecast for FY24, with a softer third-quarter EPS outlook. Concerns linger regarding the speed of recovery within the product categories and the overall consumer sentiment. Nevertheless, Moskow acknowledges management’s reasonable strategies for value creation through the SOVO acquisition, potential margin growth in the Snacks division, and the possibility of a corporate split if it proves beneficial.
Campbell’s second quarter saw a 1% decline in organic sales with a slight increase in gross margin and EBIT. Despite strong performances from certain Snack Power Brands and market share gains in condensed soup and broth, other areas such as eating soups and partner brands experienced declines. The near-term outlook for Salty Snacks was also revised to be weaker than expected. Looking ahead, management highlighted easier year-over-year comparisons and the strong two-year CAGR as positive indicators, although they remain cautious due to consumer behaviors like smaller basket sizes and fewer shopping trips. Moskow notes management’s optimism about the integration of Sovos and network optimization in Snacks, potentially leading to significant margin expansion and the strategic separation into two standalone businesses. Despite these potential positives, the conservative forecast for the remainder of the year reflects the uncertainties that justify the Hold rating.
In another report released yesterday, Wells Fargo also assigned a Hold rating to the stock with a $45.00 price target.
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Campbell Soup (CPB) Company Description:
Campbell Soup Co. operates two segments. Meals & Beverages includes the retail and foodservice businesses in the U.S. and Canada. The segment includes the following products: Campbell’s condensed and ready-to-serve soups; Swanson broth and stocks; Pacific Foods broth, soups and non-dairy beverages; Prego pasta sauces; Pace Mexican sauces; Campbell’s gravies, pasta, beans and dinner sauces; Swanson canned poultry; Plum baby food and snacks; V8 juices and beverages; and, Campbell’s tomato juice.
Snacks includes Pepperidge Farm cookies, crackers, fresh bakery and frozen products in U.S. retail, including Milano cookies and Goldfish crackers, as well as Snyder’s of Hanover pretzels, Lance sandwich crackers, Cape Cod and Kettle Brand potato chips, Late July snacks, Snack Factory Pretzel Crisps, Pop Secret popcorn, Emerald nuts, and other snacking products in the U.S. and Canada. Beginning in fiscal 2020, the segment also includes the retail business in Latin America.
The company was founded on November 23, 1922 and is headquartered in Camden, NJ. Campbell was founded in 1869.
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