Campbell Soup: Analysts Suggest a ‘Sell’

Challenges persist

While Campbell Soup (CPB) impressed investors with its better-than-expected bottom-line performance in the past several quarters, its soft organic sales, lower margins, and lower earnings led most of the analysts to maintain a “sell” rating on its stock.

Weakness in the base business, led by a decline in soup sales and cost pressure, is hurting Campbell Soup’s gross margin rate. An unfavorable mix and promotional spending are also a drag. Campbell Soup’s net sales had stellar growth in the past four quarters, which reflected benefits from acquisitions. However, the company’s net sales are expected to decline in the near term as it annualizes its recent acquisition and faces tough comparisons.

Campbell Soup: Analysts Suggest a ‘Sell’

Campbell Soup’s adjusted EPS is expected to stabilize in fiscal 2020. However, the growth rate will likely remain low.

Analysts’ ratings and target price

Among the 15 analysts providing recommendations on Campbell Soup stock, nine recommended a “sell,” four recommended a “hold,” and two recommended a “buy.” Analysts’ target price indicates a potential downside to Campbell Soup stock. Analysts have a target price of $33.64 per share on Campbell Soup, which implies a downside of 8.5% based on its closing price of 36.78 on May 28.