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A Look at Campbell Soup’s Risk Factors

Campbell Soup Company (CPB) is a food and beverage company that operates in the United States and abroad.

Let’s take a look at what has changed in the company’s key risk factors that investors should know. (See CPB stock charts on TipRanks)

Campbell Risk Factors

According to the new Tipranks Risk Factors tool, Campbell’s main risk category is Production, which accounts for 30% of the total 20 risks identified for the stock. The next two major risk factor contributors are Finance & Corporate and Legal & Regulatory, at 20% and 15%, respectively.

Since August, the company has added three new risk factors.

First, under the Finance & Corporate category, Campbell emphasizes that it has undertaken multi-year cost-cutting efforts, with a yearly cost reduction target of $850 million for continuing operations by 2022. However, the completion of these initiatives will need a significant amount of operational resources from the firm.

Second, under the Legal & Regulatory category, the company highlights that any change in climatic conditions, bad weather conditions, or natural catastrophes might affect crop size, crop quality, and lead to negative pricing.

Third, under the Production category, Campbell emphasizes that an overall labor scarcity, lack of trained labor, or higher labor turnover, whether driven by COVID-19 or general macroeconomic reasons, may have a substantial detrimental impact on the company’s operations and cash flows.

On the brighter side, the overall sector average for the Finance & Corporate risk factor is 37.6%.

Analysts’ Take on CPB

Piper Sandler analyst Michael Lavery maintained a Hold rating on Campbell, but increased his price target to $45 from $43. This implies 6% upside potential to current levels.

Lavery said, “Risks remain, both with untested elasticity to higher than previously-implemented pricing and with steel cost uncertainty, but we now have better visibility on Campbell’s plans for managing its headwinds.”

Campbell Soup stock commands a Hold consensus rating based on one Buy, seven Holds, and one Sell.

The average CPB price target is $45.78, reflecting a potential 12-month upside of 7.8% from current levels. 

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