04:02 PM EST, 03/05/2024 (MT Newswires) -- Campbell Soup ( CPB ) is positioned for a largely in-line fiscal second quarter with possible top-line upside amid strong January soup trends, though the consumer packaged food industry remains challenged, RBC Capital Markets said Tuesday.

Campbell's salty snacks category continues to slow and its soup business faces pressure from a trade-down to private label and value offerings, according to analyst Nik Modi. He rates the maker of Kettle soups and Cape Cod chips at sector perform with a $47 price target.

For the second-quarter print scheduled for release on Wednesday, RBC is forecasting revenue of $2.45 billion on a year-over-year organic sales decline of 0.9%, slightly better than the consensus view of $2.43 billion, reflecting a 1.6% organic drop. The brokerage is modeling earnings per share of $0.75, below the Street's $0.77 view.

"While scanner data looks OK, we remain cautious on snacks given what we believe is a continuation of category softness driven by consumer pressures, especially in categories where (private label) has a larger presence," Modi said.

Campbell's meals and beverages segment may get a boost from strength in soup. Soup trends likely benefited during the quarter from retailers switching out private labels for Campbell products, consumers seeking out more value and robust holiday demand, according to RBC.

However, the consumer packaged goods industry remains largely challenged in the current macro environment and Campbell's second half-weighted guidance "gives us increased caution," according to RBC.

"With pricing ability fading as the year progresses, delivering volume growth becomes more crucial and presents what we think will be a substantial challenge," Modi said.

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