Campbell’s Downgraded to Underweight with $20 Price Target on EPS Risk
Wells Fargo downgraded The Campbell’s Company to Underweight, citing projected leverage above 4× by fiscal 2027 and stretched dividend payouts. The firm cut Campbell’s price target to $20 based on 2027 earnings multiples and forecasts EPS 10% below consensus.
1. Rating Downgrade to Underweight
Wells Fargo moved Campbell’s from Market Weight to Underweight, highlighting growing concerns over the company’s earnings resilience and capital structure. The downgrade places Campbell’s at the lower end of its consumer staples coverage.
2. Earnings and Leverage Concerns
Analyst projections for fiscal 2027 EPS sit 10% below consensus, reflecting expectations of sluggish consumption and rising inflation. Campbell’s net debt-to-EBITDA ratio is forecast to exceed 4× by 2027, raising questions about financial flexibility.
3. Price Target Cut to $20
The bank trimmed Campbell’s price target to $20, applying conservative 2027 earnings multiples to reflect heightened profit risk. This represents a significant reduction from prior targets as margin pressures and cost controls weigh on estimates.
4. Risk and Upside Scenarios
Downside risks include potential further inflationary headwinds, tight SG&A budgets and sustained leverage. Upside catalysts could emerge from stronger summer consumption, easing input costs and deeper cost-saving initiatives.