CPB
CAMPBELL SOUP COMPANY
49.5900
2.12%
49.5900
2.12%
44.9950 64.2300
52 weeks
52 weeks

Mkt Cap 15.03B

Shares Out 303.07M

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CLSA Loses Its Appetite For Campbell Soup, Cuts Price Target To $59

CLSA is dialing back near-term expectations for Campbell Soup Company CPB 0.72% and believes the company’s fiscal 2017 year will likely be more about investment than about profits. According to analyst Michael Lavery, Campbell’s investment in innovation will not come cheap.

“Campbell’s FY16 EBIT margin expansion and EPS growth have been impressive, but sales growth remains difficult, and margin gains have likely peaked,” Laverly explains.

“The soup category (one third of sales) continues to face pressures, and we expect higher investments in innovation and marketing to weigh on margins.”

Related Link: Has The Defensive And High Yield Play Run Its Course?

Laverly adds that additional cost-cutting will be difficult, as the company has already significantly trimmed employee headcount and consolidated its business.

A recall of Bolthouse Protein Plus and issues within the carrot business resulted in a 12 percent decline in organic sales in fiscal Q4. In addition, Laverly believes the new procedures implemented in response to these issues will likely negatively impact sales in the coming year.

In light of these pressures, CLSA has lowered its fiscal 2017 EPS estimate for Campbell from $3.11 to $3.04 and slashed its price target for the stock from $64 to $59. CLSA is predicting 4-4.5 percent EPS growth in fiscal 2017 and 2018. The firm maintains an Underperform rating.

DateFirmActionFromTo
Sep 2016CLSAMaintainsPerform
Sep 2016CitigroupMaintainsNeutral
Aug 2016Deutsche BankMaintainsHold

© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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