Campbell Soup Company (NYSE: CPB) is scheduled to host an investor day presentation on Thursday.
Wells Fargo's John Baumgartner maintains a Market Perform rating on Campbell Soup with an unchanged $41 price target.
UBS' Steven Strycula maintains at Sell, $36 price target.
Wells Fargo: Clarity Needed
Campbell has seen share losses since 2015 and better execution can help sustain sales at a flat rate, Baumgartner wrote in a note. If "flat is the new up," management will need to explain its strategy at a time when the entire soup category is showing flattish sales.
Management may also look to explain opportunities in adjacent markets, especially the $5.6-billion sauce category. Sauces are performing well as the millennial market is spending more on seasonings and condiments.
Campbell acquired snack maker Snyder's-Lance in early 2018 and management could announce the potential for upside from prior cost synergies of $295 million through fiscal 2022.
Baumgartner said the company could see better than expected SG&A benefits, which creates the potential for another $70 million in savings. While this estimate may be "aggressive" it is possible as the company has focused on supply chain and logistics initiatives to lower costs.
UBS: Three Issues To Address
Campbell's presentation should focus on addressing three key themes, Strycula said.
- The soup category faces multiple hurdles, including a dated can product with high sodium content. Management should explain how it plans on innovating the soup category through a more focused merchandising approach.
- The analyst said expectations call for the snack category to grow in the U.S. market by 3 percent based on Pepperidge and Lance's distribution gains.
- At the end of the year, the company should have $285 million remaining as part of its three-year cost synergy guide. Each $100 million in savings net of reinvestment should translate to 25 cents per share in earnings and an extra 100 basis points in margins.
Shares of Campbell Soup traded at $42.50 Wednesday afternoon.
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Latest Ratings for CPB
|Jun 2019||Initiates Coverage On||In-Line|
|Jun 2019||Maintains||Market Perform|
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