Campbell's (CPB) is heading into another difficult year as the company's fiscal 2027 guidance points to persistent revenue and profit pressure, with weakness in snacks and elevated cost inflation expected to continue, RBC Capital Markets said Friday in a report.
Campbell's 36% cut to its quarterly dividend to $0.25 a share underscores the strain on the business and marks a reversal from management's reaffirmation of the payout in fiscal Q3, the report said. While the move frees up roughly $170 million annually for cash flow and debt payments, "the reversal in messaging will likely hurt confidence with income-oriented investors," RBC said.
The packaged-food company faces a similar degree of headwinds in fiscal 2027 as in Q4, with management expecting organic net sales to fall 2% to 4% and gross margins to decline 50 to 100 basis points for the year, RBC said.
The launch of a new enterprise-wide savings program targeting $500 million by fiscal 2030 shows Campbell's is taking steps to rebuild margins, with more than $100 million in savings expected in fiscal 2027, the report said.
RBC lowered its price target on Campbell's stock to $19 from $21 and maintained its sector-perform rating.
"We knew the path to recovery would not be straightforward, and we remain in wait-and-see mode amid what continues to be a reset period for the company, though we think management is doing the right things," the report said.
Price: 21.46, Change: -0.67, Percent Change: -3.03
