On Monday, Deutsche Bank (ETR:DBKGn) adjusted its price target for Campbell Soup (NYSE:CPB) shares, increasing it marginally to $48.00 from the previous $47.00, while keeping a Hold rating on the stock. The firm's stance reflects a cautiously optimistic view ahead of the company's third-quarter fiscal year 2024 results.
Campbell Soup's current market sentiment leans positive, primarily due to robust consumption data, which has been bolstered by the strong performance of Sovos and Rao's brands. Additionally, the company's strategic promotional activities in the Snacks division are seen as contributing to gains in both volume and market share.
Despite a slight decline in Meals & Beverages sales, which dropped 3.2% in the third quarter excluding Sovos compared to a 3.3% decrease in the second quarter, the company's core consumption momentum is reportedly aligning with market expectations.
The Snacks segment has experienced a softening in demand, with a 1.6% decrease in the third quarter of 2024 as opposed to a 1.1% increase in the previous quarter. Despite these mixed results, the overall picture for Campbell Soup suggests a stable performance.
Deutsche Bank anticipates that Campbell Soup will revise its full-year 2024 guidance to account for the Sovos acquisition, which is expected to have a modest dilutive effect. However, the bank predicts that the company's guidance, excluding the impact of Sovos, will likely remain consistent.
This includes projections for flat to 2% organic growth, a -0.5% to 1.5% range in sales growth, and an implied EBIT between $1.408 billion and $1.435 billion. The forecast also includes an estimated earnings per share (EPS) ranging from $3.09 to $3.15.
InvestingPro Insights
As Campbell Soup (NYSE:CPB) navigates through its fiscal year, investors are keenly observing its performance metrics and market position. According to InvestingPro data, the company boasts a solid market capitalization of $13.85 billion and a P/E ratio that stands at 18.11, which adjusts to a more attractive 15.61 when considering the last twelve months as of Q2 2024. This suggests a reasonable valuation of the company in the context of its earnings.
InvestingPro Tips indicate that Campbell Soup has a commendable track record of maintaining dividend payments for 54 consecutive years, which could be a significant factor for income-focused investors. Analysts also predict the company to be profitable this year, aligning with the company's positive profit figures over the last twelve months. The dividend yield as of April 2024 is 3.19%, underscoring the company's commitment to returning value to shareholders.
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