Energy-related inflation looming; In Line

Research evidence excerpt

Energy-related inflation looming; In Line

June 09, 2026

VALUATION METHODOLOGY

Our $23 one-year price target is based on our sum-of-the-parts analysis equating to ~12x FY27e P/E

RISKS

Commodity and input costs volatility. This could impact the company’s profitability and more than offset ongoing productivity. In

addition, depending on the source of cost inflation (e.g. energy or labor versus protein or grains), Campbell Soup may be unable

to raise pricing in a manner timely enough or sufficient enough to avoid significant negative margin impacts.

Tariffs and trade policy. The company imports tinplate steel (cans) and canola oil (chips) from Canada as well as exports soup

to Canada. These imports and exports could put margins at risk if tariffs are imposed on Canada and/or Canada retaliates with

tariffs on US goods.

Competition and promotional environment. Packaged food companies often rely heavily on promotions (i.e. displays and

discounting). In cases of increased competition, Campbell Soup and its peers may engage in pricing battles via consumer

promotional campaigns which would negatively impact the company’s organic pricing and gross profitability.

Sovos integration risk and divestiture risk. Last year, Campbell Soup acquired Sovos and in years past sold its fresh carrots

and juices business while also planning to sell its global cookies assets. This year, the company divested its Noosa yogurt business.

As with any large scale mergers or divestitures, significant integration and supply chain errors can occur that, among other things,

would cause the company to fall short of its financial targets.

Execution risk. As we have seen in recent years in the food industry, execution risk remains a significant risk factor. While large