Campbell Soup price target lowered to $29 by TD Cowen on tariff concerns

TD Cowen has lowered its price target on Campbell Soup (CPB) to $29.00 from $33.00, maintaining a Hold rating, primarily due to escalating tariff-related headwinds expected to significantly impact fiscal year 2026. The firm reduced its FY26 earnings per share estimate to $2.40, an 18% year-over-year decline and below current consensus, as temporary mitigation strategies for tariff costs are set to fade. This move reflects a broader cautious sentiment among analysts regarding CPB's future profitability, particularly its snacks division, amidst rising costs and trade negotiation uncertainties, despite some positive outlooks for its meals and beverages segment.

Analysis

Analyst sentiment on Campbell Soup (CPB) has turned increasingly cautious, primarily due to significant tariff-related headwinds anticipated for fiscal year 2026. TD Cowen's recent price target reduction to $29.00 quantifies this risk, with the firm lowering its FY26 EPS estimate to $2.40, representing a substantial 18% year-over-year decline and falling well below the current consensus of $2.77. This outlook is echoed by other firms like Piper Sandler and DA Davidson, which highlight persistent challenges in the company's Snacks segment, rising input costs, and concerns over pricing power amid inflation. While the stock has already fallen 36.2% year-to-date and offers a 5.11% dividend yield, the recurring theme across multiple analyst notes is that future profitability is at risk. The negative sentiment is partially offset by Bernstein SocGen's 'Outperform' rating, citing strong performance in the core soup segment, and Argus's note on the positive potential of the Sovos acquisition. However, the overarching concern is that temporary cost mitigation strategies will fade, exposing the company to significant earnings pressure just as the benefits of cost-cutting lag, with the absolute size of tariffs potentially increasing pending trade negotiations.

Key Decisions for Investors

• Investors should weigh the attractive 5.11% dividend yield against the notable risk to fiscal year 2026 earnings, which analysts forecast could decline significantly due to tariff impacts.
• Monitor the performance of the Snacks division and any updates on the Sovos acquisition integration, as these are key internal factors that could either exacerbate or offset external cost pressures.
• Given the numerous downward revisions and 'Hold' or 'Neutral' ratings, it may be prudent to await greater clarity on the magnitude of tariffs and the company's mitigation strategy before building a new position.