What To Expect From Campbell Soup's Investor Day

Campbell Soup Company CPB is scheduled to host an investor day presentation on Thursday.

The Analysts

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.

1. 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.
2. 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.
3. 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.

Price Action

Shares of Campbell Soup traded at $42.50 Wednesday afternoon.

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