Stifel lowers Campbell Soup stock price target on snacks recovery concerns

Stifel lowered its price target for Campbell Soup (CPB) to $38 from $40, maintaining a Hold rating, after the company reported Q3 earnings that beat estimates despite a 3% EPS decline to $0.73. While the Meals and Beverages division performed well, a slower-than-expected recovery in the Snacks division, coupled with anticipated tariff impacts, led to downward revisions in EPS estimates for fiscal years 2025 and 2026 by Stifel and other analysts including Jefferies, BofA Securities, Barclays, and Citi.

Analysis

Campbell Soup (CPB) reported third-quarter earnings per share (EPS) of $0.73, surpassing consensus estimates by $0.08, despite a 3% year-over-year decline. The company has demonstrated solid revenue growth of 8.65% over the last twelve months and maintains an attractive dividend yield of 4.55%. Performance is bifurcated: the Meals and Beverages division, particularly its soup portfolio, is gaining market share, while the Snacks division's recovery is proving slower than anticipated due to weaker category trends and increased competition. This has prompted Campbell to project EPS at the low end of its guidance range, with an additional unbudgeted tariff impact expected to reduce Q4 EPS by $0.03 to $0.05. Consequently, Stifel lowered its price target to $38 from $40, maintaining a Hold rating, and adjusted its FY2025 and FY2026 EPS estimates downwards to reflect these challenges. Other analysts, including Jefferies (PT $34, Hold), BofA Securities (PT $33, Hold), Barclays (PT $35, Underweight), and Citi (PT $32, Hold), have also revised price targets down, citing concerns over the Snacks segment, tariff impacts, shipment timing, cost inflation, and future earnings growth prospects. Despite these analyst revisions and a current trading price of $34.25, InvestingPro analysis suggests the stock may be undervalued based on multiple valuation methods.

Key Decisions for Investors

• Investors should closely monitor the performance of Campbell's Snacks division, as its slower-than-expected recovery and competitive pressures are significant headwinds impacting profitability and analyst sentiment.
• Factor in the potential for earnings pressure from upcoming tariffs, estimated at $0.03-$0.05 per share for Q4, and potential increases in brand support spending, which could impact future fiscal year estimates.
• Despite multiple analyst price target reductions and a consensus Hold rating, weigh the stock's current valuation, which InvestingPro suggests is undervalued, and its 4.55% dividend yield against the articulated operational challenges before making investment decisions.