Campbell Soup Shares Slump After Q3 Earnings Miss, Weak Outlook

Campbell Soup shares slumped as much as 9% on Wednesday after the Camden County, New Jersey-based soups and snacks maker reported lower-than-expected earnings and revenue in the fiscal third quarter.

The processed food and snack company reported earnings per share (EPS) of $0.57 on revenue of $1.98 billion, missing the Wall Street consensus estimates of $0.66 per share on revenue of $2 billion. Net sales declined 11% as a result of lapping the demand surge at the onset of the pandemic in the prior year.

For the full year 2021, Campbell Soup slashed its net sales forecasts to -3.5% to -3.0% decline from the previous projection of -3.5% to -2.5%. Adjusted EPS is predicted to be between $2.90 to $2.93 per share, down from the previous forecasts of $3.03 to $3.11.

The company expects continued margin pressure related to its transition out of the COVID-19 environment, and more pronounced inflation while pricing actions take hold in the beginning of fiscal 2022.

Campbell Soup shares slumped as much as 9% to $44.73 on Wednesday. The stock plunged over 3% so far this year.

Analyst Comments

“We are Equal-weight Campbell Soup (CPB) we are cautious on CPB’s long-term growth prospects due to its exposure to structurally challenged categories, partly offset by stronger LT growth in Snacks,” noted Pamela Kaufman, equity analyst at Morgan Stanley.

“CPB reported 3Q21 EPS of $0.57, below consensus $0.67, driven by a topline miss and operating deleverage. CPB reduced FY21 guidance due to the Q3 miss, the post-COVID environment, and rising inflation. CPB expects sustained margin pressure driven by a return to a normalizing post COVID environment and higher inflation. Guidance also reflects the impact from the Plum baby food divestiture in May 2021. CPB announced a $250 MM share repurchase program (1.7% of its market cap).”

Campbell Soup Stock Price Forecast

Five analysts who offered stock ratings for Campbell Soup in the last three months forecast the average price in 12 months of $54.00 with a high forecast of $59.00 and a low forecast of $50.00.

The average price target represents 16.78% from the last price of $46.24. Of those five analysts, two rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $50 with a high of $71 under a bull scenario and $31 under the worst-case scenario. The firm gave an “Equal-weight” rating on the packaged food company’s stock.

Several other analysts have also updated their stock outlook. Credit Suisse Group decreased their target price to $49 from $55 and set a “neutral” rating. Jefferies Financial Group decreased their price objective to $54 from $58 and set a “buy” rating. Deutsche Bank decreased their price objective to $50 from $52 and set a “hold” rating.

“While CPB’s Q3 results were only 1% light vs. cons. on the top line, EBIT missed by~12%, driven by GM pressure off rising inflation and supply-chain headwinds, combined with delayed pricing until FY’22,” noted Rob Dickerson, equity analyst at Jefferies.

“While FY’21 net sales guidance was bumped by 50 bps on the low end, EBIT and EPS growth was lowered by 4.5% and 5%, respectively, mainly driven by the delta b/t costs, pricing, and other offset.”

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