On Thursday, DA Davidson initiated coverage on Campbell Soup Company (NYSE:CPB) with a Buy rating and set a stock price target of $48.00. The firm's analyst cited several factors that could positively influence the company's performance in the second half of 2024, including easier volume comparisons as the company moves past the effects of pantry de-stocking and a moderation in core inflation.
The analyst anticipates a potential uplift in the latter half of the year, suggesting that Campbell Soup could see an inflection point as it laps the impact of previous consumer behaviors. The firm also noted the company's targeted initiatives to streamline its Snacks segment, which are expected to bolster margins over the long term.
Campbell Soup's recent acquisition of the Rao's brand, which is pending approval from the Federal Trade Commission (FTC), was highlighted as a significant positive. The analyst believes that Campbell Soup is well-positioned to manage the Rao's brand, which is considered one of the most attractive assets in the center store Food category.
Despite acknowledging a challenging industry backdrop that may present a near-term overhang, DA Davidson's analyst expressed confidence that the company's current valuation provides a cushion. The firm's outlook suggests that Campbell Soup's strategic initiatives and asset management could lead to a stronger financial performance in the upcoming months.
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