Piper Sandler analyst Michael S. Lavery upgraded Campbell Soup Company (NASDAQ:CPB) to Overweight from Neutral, raising the price forecast from $47 to $56.

The analyst upgraded Campbell Soup due to improved long-term growth prospects from its Rao's brand and better sales trends in the U.S. (excluding SOVO brands).

Despite better trends, the stock has had a 15% pullback since mid-September. The analyst sees this as a good buying opportunity.

Lower steel costs (down 25%) and secured contracts for 2025 further support growth.

The analyst raised 2025 and 2026 earnings per share (EPS) estimates slightly, from $3.20 to $3.21 and $3.37 to $3.38, respectively.

Per the analyst, the stock is considered well-positioned among large-cap food stocks.

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Campbell Soup has agreed to sell its Noosa yogurt business for an undisclosed amount, with the deal expected to close in first quarter of 2025. The company acquired Noosa as part of its SOVO purchase in March 2024.

The analyst assumes the sale will be finalized on January 1, 2025, with proceeds of around $250 million.

Per the analyst, the divestiture is expected to reduce sales by approximately $177 million annually and will slightly lower F25 earnings per share (EPS) by $0.01.

However, this impact is expected to be more than offset by higher revenue growth expectations.

The analyst raised the 2025 EPS estimates from $3.20 to $3.21 and the 2026 EPS expectations from $3.37 to $3.38.

Price Action: CPB shares are trading higher by 1.16% to $44.79 at last check Thursday.

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