Don't Believe the Hype, Campbell Soup's (CPB) Stock is Poised to Outperform - Goldman Sachs

November 21, 2012 8:44 AM EST
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Price: $62.93 +0.14%

Rating Summary:
    0 Buy, 8 Hold, 4 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 22 | Down: 16 | New: 12
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Goldman Sachs bumped its price target and reiterated its Conviction Buy List rating on Campbell Soup (NYSE: CPB) following mixed Q1 results. The firm has more conviction in the numbers than the rhetoric.

"1QFY13 results were mixed but management's rhetoric suggesting soft sales and earnings growth in 2QFY13 was disappointing to us," the firm comments. "It is clear to us that CPB's business is not yet firing on all cylinders with its beverage business now softening just as soft spots, such as Australia, are firming up. But we continue to believe that CPB's future rests on the prospects of its core US soup business and we remain constructive on this front."

Goldman said it is encouraged that CPB posted its second consecutive quarter of soup sales growth after two plus years of declines. They believe reported trends will continue to firm up and view management's 2Q guidance as "overly conservative."

CPB's soup innovation, arguably its most impressive in a decade, continues to gain distribution, the firm notes. Investment is ramping up in its new marketing campaign. In addition, consumption comparisons become "exceptionally easy" in the months ahead, Goldman notes. "These factors fuel our belief that soup shipments will continue to improve, even with inventory headwinds in 2Q, and that the stock can continue to grind higher," the analyst comments.

For an analyst ratings summary and ratings history on Campbell Soup click here. For more ratings news on Campbell Soup click here.

Shares of Campbell Soup closed at $36.21 yesterday.

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