Analysts suggest a “sell”
Analysts continue to recommend a “sell” rating on Campbell Soup (CPB) stock despite the company’s better-than-expected financial performance. However, a few analysts raised the target price. J.P. Morgan has a target price of $38, which increased from $34 per share. Credit Suisse raised its target price to $36 per share.
So far, Campbell Soup stock has risen ~27% in 2019. The company’s base business is still weak. As a result, analysts recommend a “sell” on Campbell Soup stock. The company’s top line gained from its recent acquisitions. Analysts expect the top line to decline in upcoming quarters. Campbell Soup faces tough comparisons, while challenges persist in the base business.
Campbell Soup’s adjusted earnings are projected to stabilize in upcoming quarters. However, the rate growth will likely stay low due to the input cost headwinds and negative mix. The lack of a benefit from the lower tax rate could pressure the company’s earnings.
Given the uptrend in the stock, Campbell Soup trades at a forward PE ratio of 16.6x, which doesn’t look attractive based on the projected growth rate of 3.0% in its fiscal 2020 EPS.
Ratings and target price
Among the 15 analysts tracking Campbell Soup, nine recommended a “sell,” four recommended a “hold,” and two recommended a “buy.” The consensus target price of $36.42 per share implies a downside of 13.1% based on Campbell Soup’s closing price of $41.93 on June 5.