Wells Fargo has adjusted its outlook on Campbell Soup Company (NASDAQ: NYSE:CPB), increasing the price target from $49.00 to $51.00 while maintaining an Equal Weight rating on the stock.
The company, known for its iconic soup products, has announced an upcoming name change to "The Campbell's Company," subject to shareholder approval. This rebranding is part of its strategy to embrace a more diversified and trend-focused portfolio, aiming to meet its enhanced long-term goals.
The Wells Fargo analyst believes that while Campbell Soup has laid out a strong plan with clear components for growth, the projected acceleration of the company's performance is not guaranteed by fiscal year 2026.
The analyst's forecast for fiscal year 2025 remains the same, with an updated earnings per share (EPS) estimate of $3.42 for fiscal year 2026, up from the previous $3.37 estimate.
The new price target is based on an unchanged multiple of 14.5 times the projected calendar year 2026 earnings per share. The analyst's commentary suggests that the stock may face volatility in the coming months depending on whether the company can demonstrate improved trends.
A positive shift in performance could provide some relief to the stock, whereas a lack of improvement may lead to tension among investors.
Campbell Soup's commitment to a more on-trend portfolio aligns with its raised long-term commitments. The analyst has grounded their model through fiscal year 2028, taking into account the targets outlined by the company.
In other recent news, Campbell Soup reported strong fourth-quarter results for fiscal year 2024, with improved volume across divisions and double-digit growth in adjusted earnings before interest and taxes (EBIT) and earnings per share (EPS).
The acquisition of Sovos Brands significantly influenced these positive results. The company also announced the divestiture of its Pop Secret business, signaling a strategic shift towards core brands.
TD Cowen maintained its Hold rating on Campbell Soup, despite the Snacks division experiencing a 3% decline during the quarter. The firm's decision reflected the potential for increased profitability driven by productivity improvements.
Furthermore, Wells Fargo raised its price target for Campbell Soup to $49 from $47, maintaining an Equal Weight rating on the stock. This revision reflects anticipated improvements in the company's volume and mix, as well as positive momentum in the Snacks division.
For the fiscal year 2025, Campbell Soup provided optimistic guidance, expecting a recovery in the Snacks division, with net sales projected to grow approximately 9% to 11%, adjusted EBIT growth projected to be 9% to 11%, and adjusted earnings per share increasing 1% to 4%.
InvestingPro Insights
As Campbell Soup Company (NASDAQ:CPB) navigates its rebranding and strives to meet long-term goals, current market data and analysis from InvestingPro offer insights into the company's financial health and stock performance. With a market capitalization of $15.26 billion and a trailing twelve-month P/E ratio of 17.5, Campbell Soup's valuation reflects a market that recognizes its profitability. Notably, the company has demonstrated a strong return over the last three months, with a 19.53% price total return, underscoring its recent momentum in the stock market.
InvestingPro Tips highlight that Campbell Soup has maintained dividend payments for an impressive 54 consecutive years, a testament to the company's financial stability and commitment to shareholder returns. Additionally, analysts predict that the company will be profitable this year, which aligns with the positive outlook suggested by Wells Fargo's updated price target. For investors seeking further analysis and guidance, InvestingPro offers additional InvestingPro Tips on Campbell Soup, providing a deeper dive into the company's financials and future prospects.
It's important to note that while Campbell Soup's short-term obligations exceed its liquid assets, the company's long-term track record and recent performance may offer reassurance. For a comprehensive view of Campbell Soup's financial standing, including more InvestingPro Tips, investors can visit https://www.investing.com/pro/CPB.
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