Campbell Soup (CPB) Shares Down 4% as Gross Margin Decline, Lowered Outlook Weigh

Shares of Campbell Soup (NYSE: CPB) are down more than 4% today following Q2 results and lowered FY11 guidance reported this morning.

The company ">reported quarterly earnings of 71c per share, down about 4% from the same quarter last year, and a penny worse than the Street had been looking for. On the top line, Campbell reported $2.13 billion in sales, down a modest 1% from Q2 of 2010.

Looking ahead, Campbell lowered its FY11 EPS guidance from $2.51-$2.59 to $2.40-$2.45, and its sales guidance from up 1-3% to down 1%-up 1%.

Around the Street, analysts seem to be as equally negative as the market today:

• Goldman Sachs - said the bottom line number was impacted by a lower-than-expected tax rate to the tune of 3c per share. The firm also noted that while the lowered outlook was "not entirely unexpected, the magnitude of the negative revision..." was greater than Goldman had been looking for. The firm also pointed out that gross margin declined a sharp 110 basis points "in a still tame inflation environment." Goldman maintains a Sell rating and $35 price target on shares of Campell Soup.
  
• Deutsche Bank - also noted the the 39.4% gross margin, saying that the decline was "due to weaker soup sales and inflation." Deutsche said that the "lower guidance is somewhat of an exception vs. other packaged food companies that have already reported."

Visit our Analyst Ratings page to track all the market-moving analyst action on shares of Campbell Soup.

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