Campbell's Faces Slower Growth: Analyst Cuts Price Forecast As Consumer Sentiment Could Weaken Further

RBC Capital Markets analyst Nik Modi reiterated the Sector Perform rating on Campbell’s Co CPB, lowering the price forecast to $44 from $51.

Yesterday, the company reported second-quarter sales growth of 9% to $2.685 billion, missing the analyst consensus estimate of $2.74 billion.

For FY25, Campbell sees net sales growth of 6% to 8% (prior view: 9% to 11%). Adjusted EBIT growth of 3% to 5% (previous view: 9% to 11%).

Modi suggests that while Campbell’s challenging results and full-year guidance cut were anticipated, the company made a wise decision to address these issues upfront, allowing them to focus on performance improvements despite ongoing macro and consumer challenges.

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Additionally, Campbell’s Company is considered undervalued compared to its peers and historical performance, though the analyst stresses that further efforts are needed before the stock can see positive movement.

The analyst states in response to F2Q results, estimates were adjusted for FY25 net sales growth to +6.7% (prior view: +9.2%), organic sales growth to -1.2% (prior view: +0.4%), EBIT growth to +9.2% (prior view: from +3.2%) and EPS to $2.99 (prior view: $3.17).

Per the analyst, lowering the full-year guidance was the right move, but due to the fluid environment, Modi remains cautious and slightly below the midpoint of the company’s top-line guidance, anticipating consumer sentiment could “soften” further.

CPB Price Action: Campbell’s Co. shares are trading higher by 0.61% to $39.40 at last check Thursday.

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