The Campbell’s Company (NASDAQ:CPB) shares are trading lower on Thursday.
RBC Capital Markets analyst Nik Modi reiterated the Sector Perform rating on the stock, with a price forecast of $51.
According to the analyst, Sovos’ results were better than expected and helped support M&B, while the Salty Snacks and Cookies subcategories faced competition that negatively impacted the overall Snacks segment.
Despite the challenging consumer environment, which is still affecting performance, management has kept its FY25 guidance intact and expects steady growth in sales and market share in the second quarter, which should continue into the second half of the year.
However, the analyst is less optimistic about the consumer market and CPB’s categories than management is, which creates potential risks to earnings in Modi’s view.
Also Read: Tesla’s Path To $400: Bank Of America Highlights EV, AI Growth
The analyst notes that, in response to the first quarter results, Modi has adjusted their estimates for FY25 net sales growth to +9.2%, which remains unchanged, while organic sales growth is now projected at +0.4%, down from the previous estimate of +0.7%.
The analyst remains at the lower end of the guided ranges due to a slightly more cautious outlook on the momentum of the packaged food category compared to CPB management’s perspective.
Piper Sandler analyst Michael S. Lavery reiterated the Overweight rating on the stock, with a price forecast of $56, suggesting that the spending step-up is a near-term drag.
Lavery forecasts the second quarter of 2025 EPS to decline but projects average gains of 7-8% over the next six quarters. As a result, the analyst lowered the FY25 EPS estimate from $3.21 to $3.14 and the FY26 EPS estimate from $3.38 to $3.33.
In the second quarter of 2025, the analyst looks for sequential improvement in volume and share gains.
The Campbell’s Company is continuing to invest in Rao’s innovation and marketing in FY25.
The company is focusing on expanding into white sauces, which provides greater production flexibility since it doesn’t rely on Italian tomatoes. Additionally, Rao’s has potential for geographic expansion in Canada, the analyst writes.
Price Action: CPB shares are trading lower by 0.49% to $42.48 at last check Thursday.
Read Next:
Photo by JHVEPhoto via Shutterstock
