Campbell Soup Company (NYSE: CPB) stock plummeted more than 10 percent on Friday after investors were blindsided by a guidance cut and the surprise resignation of Campbell CEO Denise Morrison. Campbell’s fiscal third-quarter numbers were mostly in-line with consensus expectations, but analysts say Campbell has a lot to prove to investors.
Campbell reported third-quarter adjusted earnings per share of 70 cents, beating consensus analyst estimates of 60 cents. Revenue for the quarter was $2.13 billion, in-line with analyst expectations and up 15 percent from a year ago.
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In a statement, Campbell CFO Anthony DiSilvestro says the company made progress in its plan to diversify its business in the third quarter by completing its $4.87 billion buyout of Snyder’s-Lance, but Campbell is still not satisfied with its financial performance.
“Our performance has been impacted by both execution-related and external challenges,” DiSilvestro says. “We are addressing these challenges with renewed urgency. Looking ahead, we will be reviewing all aspects of our strategic plans and portfolio composition.”
Campbell says it will be discussing the outcome of the review when it reports its fiscal fourth-quarter financials in August.
Campbell also cut its full-year 2018 EPS guidance. Excluding the Snyder’s-Lance acquisition, the company had previously been expecting EPS growth of between 2 and 4 percent, but now it expects EPS to fall between 1 and 3 percent. Campbell raised its full-year revenue growth forecast slightly from a previous range of between -1 percent and 1 percent to a new range of between zero and 1 percent.
The biggest news of the day from Campbell is that Morrison is stepping down effective immediately after more than eight years at the helm at Campbell. Campbell said Morrison will be replaced on an interim basis by board member Keith McLoughlin and gave no reason for Morrison’s departure.
The broad stock market rally has left Campbell Soup behind, and CPB stock is now down more than 27 percent in the past five years. Bank of America analyst Bryan Spillane says the company still has a lot to prove.
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“We believe CPB will have limited financial flexibility in the near term as it de-levers post transaction,” Spillane says. ” We will need to see evidence of a successful integration of [Snyder’s-Lance], which will be a potential driver of upside over time.”
Bank of America has a “neutral” rating and $46 price target for CBP stock.
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Campbell Soup Company (CPB) Stock Goes Cold After CEO Quits originally appeared on usnews.com
