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Why Analysts Have a ‘Sell’ Rating on Campbell Soup Stock

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Tepid performance, persisting challenges

Campbell Soup (CPB) has disappointed investors with its financial performance in the past several quarters. The company’s strategies aren’t working as its soups and beverages business continues to underperform. Its much-touted Fresh segment is also under scrutiny since it has failed to meet expectations.

To add to its pain, retaliatory tariffs from Canada, a tough retail environment in the United States, and margin headwinds, including higher manufacturing, packaging, and transportation costs, have further pressured its financials. Increased interest expenses are also expected to subdue its earnings.

Campbell Soup is following in the footsteps of other major food companies, including Kellogg (K), General Mills (GIS), and J.M. Smucker (SJM), by reshaping its portfolio through acquisitions to accelerate its sales growth rate.

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The company acquired Pacific Foods and Snyder’s-Lance to expand in fast-growing categories. The acquisitions are expected to support CPB’s top-line growth rate. However, in the near term, a weakness in the soups and beverages segment and margin headwinds are likely to hurt its financials. Uncertainty over the possible sale of the company also worries analysts.

Target price suggests 12.6% downside

Among the 17 analysts providing ratings and target prices for Campbell Soup stock, 41% are recommending a “sell,” 35% are recommending a “hold,” and 24% have rated it a “buy.” Analysts have a consensus target price of $36.15 for the stock, which indicates a downside of 12.6% to its closing price of $41.35 on August 10.

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