Campbell's drops 'Soup' from name, but it will still make soup

By Steve Gelsi

S&P 500 component is changing its name to Campbell's Company to reflect its wider packaged-foods business

Campbell's is dropping "Soup" from its name - but the company still loves making it.

After 155 years, the Camden, N.J., company and component of the S&P 500 SPX is officially changing its name to the Campbell's Company (CPB).

"We will always love soup and we'll never take our eye off of this critical business, but today we're so much more than soup," Campbell's Chief Executive Mark Clouse said at the company's investor day on Tuesday.

The new name "respects our heritage but also reflects who we are today," he said.

The new name still "celebrates soup," he said, and the logo's font and color match the iconic red-and-white soup can famously depicted by pop artist Andy Warhol in the 1960s.

The name is a "strong signal" about the company's next chapter, which will play up its 16 "leadership brands," including Rao, the Italian sauce line it acquired as part of its $2.7 billion purchase of Sovos Brands, completed in March.

Campbell's projects its soup business will remain stable and says its namesake Campbell's brand, along with its other brands, such as Chunky, Swanson, Pacific and Rao's, "can be a meaningful catalyst for upside to our plans," Clouse said.

Campbell's stock was down 4.4% on Wednesday as the second-worst performer in the S&P 500.

JPMorgan analyst Ken Goldman reiterated an overweight rating on Campbell's. He highlighted both bullish and bearish views on the stock, with the latter potentially driving the share price down for the day, along with a worse-than-expected consumer-price index update.

The company's revenue projections may be aggressive, and a "decent amount" of good news has already been baked into the stock price, Goldman said. It may also be challenging for the company to achieve its goal of a 19% profit margin in its meals and beverage business, he said.

The company's valuation is "less appealing on a relative basis," he said.

On the plus side, Campbell's is expected to benefit from gains in efficiency, and the company is poised to boost spending on capital expenditures, he said.

The company's outlook may also be conservative, which could lead to outperformance, he said.

Alliance Bernstein analyst Alexia Howard on Wednesday reiterated a market-perform rating on Campbell's and boosted her price target on the stock by $5 to $55 a share.

The 16 leading brands at Campbell's represent 84% of the company's sales and 95% of its adjusted operating profit, Howard said.

Campbell's owns three $1 billion-plus brands: Campbell's, Goldfish and Pepperidge Farm. Rao's is valued at $900 million.

"Our view had been that innovation was pretty lackluster across the industry during the years of the pandemic and supply chain disruption, but that as innovation picks up, we may start to see volumes recover, as we are beginning to see in the soup category," Howard said. "This could have a positive read across for other companies currently experiencing lackluster volume performance."

Some recent examples of product innovations include Goldfish Crisps, air-fried Kettle Chips and "super-premium" Rao's White Truffle Pasta Sauce, which is priced at $12 a jar.

The acquisition of Sovos "is unlocking new confidence across a management team that has weathered many years being dogged by lackluster top and bottom line growth," Howard said.

The company's 16 leadership brands are Goldfish, Pepperidge Farm, Cape Cod, Lance, Kettle, Snyder's, Snack Factory, Late July, Campbell's, Chunky, Pacific, V8, Rao's, Prego, Pace and Swanson.

It is also in the midst of exiting Well Yes! Soup and plans to reposition its Healthy Request products as Heart Healthy.

Clouse has been chief executive of Campbell's since 2019. He previously worked as chief executive at Pinnacle Foods.

Campbell's stock has risen 18.2% so far in 2024, compared with a 15.2% gain by the S&P 500 SPX.

-Steve Gelsi

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09-14-24 0629ET

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