Why Analysts Maintain a ‘Sell’ Rating on Campbell Soup

Recent performance disappoints

Campbell Soup (CPB) reported adjusted earnings of $0.25 per share in the fiscal fourth quarter, surpassing analyst expectations of $0.24. However, the company’s EPS fell ~52% on a YoY basis. Higher adjusted net interest expenses negatively impacted the bottom line by $0.13 during the reported quarter. Meanwhile, the adverse adjusted tax rate also had an unfavorable impact of $0.13 on its fourth-quarter EPS.

Analysts expect the company’s profitability to remain low and see a YoY decline in fiscal 2019. Weak organic sales, cost headwinds, and higher interest expenses are likely to affect the EPS. Management expects its fiscal 2019 adjusted EPS to be in the range of $2.45 to $2.53 compared with $2.87 reported in fiscal 2018. The guidance excludes the impact from planned divestitures.

Why Analysts Maintain a ‘Sell’ Rating on Campbell Soup

Rating summary and target price

Of the 17 analysts providing recommendations on Campbell Soup stock, eight analysts have a “sell” rating. Six analysts recommend a “hold,” and three analysts suggest a “buy.” Campbell Soup stock has already fallen 18.6% so far this year, and analysts’ consensus target price is $36.77 per share, which suggests further downside of 6.1% based on its closing price of $39.15 on August 30.

In comparison, analysts’ ratings indicate a “buy” on Conagra Brands (CAG) and Mondelēz (MDLZ) stock, while most analysts recommend a “hold” on Kellogg (K), Hershey (HSY), General Mills (GIS), and J.M. Smucker (SJM).