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Campbell Soup: Analysts’ Recommendations after Q3

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Campbell Soup shares

Campbell Soup (CPB) shares are expected to benefit from its better-than-expected third-quarter performance. The stock rose more than 4% during the pre-market session on June 5. Campbell Soup divested its US refrigerated soup and Garden Fresh Gourmet business. The company agreed to sell its Bolthouse Farms businesses during the third quarter. The planned divestiture of underperforming brands is positive.

So far in 2019, Campbell Soup stock has risen 15.5% as of June 4. The stock has generated better returns than the S&P 500 Index, which has risen 11.8% on a YTD basis.

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Despite the company’s better-than-expected financial performance in the past several quarters, there are concerns about continued weakness in its base business. Campbell Soup’s top-line growth is expected to slow down in fiscal 2020 as the company annualizes its Snyder’s-Lance acquisition and faces tough year-over-year comparisons. Campbell Soup’s earnings will likely continue to take a hit due to weakness in the gross margin, higher interest expenses, and lower or no benefit from the lower tax rate.

Analysts’ recommendation

Among the 15 analysts tracking Campbell Soup, nine recommended a “sell,” four recommended a “hold,” and two recommended a “buy.” Analysts’ target price of $33.64 reflects a potential downside of 11.7% based on its closing price of $38.11 on June 4.

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