Piper Sandler says Campbell Soup’s long-term growth prospects are promising thanks to its popular sauce brand Rao’s. Analyst Michael Lavery upgraded his rating on the stock to overweight from neutral. He also raised his price target to $56 from $47, indicating 26.6% upside potential from Wednesday’s closing price. The company completed its acquisition of Rao’s parent company, Sovos Brands, for about $2.7 billion earlier this year. Although Rao’s retail sales growth slowed slightly to 18.7% in the fiscal first quarter from 23.9% in the previous quarter, Lavery said there will be further growth in the future as the brand enters new markets and expands its white sauce product range. The analyst added that the stock has also fallen more than 10% in the past three months, making it a good entry point for investors. “We believe CPB is one of the better positioned large-cap food companies,” Lavery wrote in a note on Tuesday, adding that the Rao brand “is expected to continue to grow strongly.” To be sure, Lavery added, potential steel tariffs under President-elect Donald Trump’s second administration could create headwinds for Campbell Soup Co., which uses steel to make its soup cans. Lavery said steel accounts for about 4% of the company’s cost of goods and services. However, the company has secured a steel contract for 2025 and steel prices remain sluggish. “Additionally, approximately 75% of the steel used in the United States is produced in the United States, which is obviously not subject to tariffs, which helps mitigate any potential tariff risk on steel,” Livery said. “While Rao’s tomatoes The sauce is imported from Italy, but we still expect food tariff risk to be low,” the analysts continued. Analyst sentiment was mixed, with 12 out of 21 analysts rating the stock a “hold”, London Stock Exchange data showed. Analysts’ average price target rose 16%.
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