Campbell Soup could be poised to benefit from an uptick in GLP-1 drug usage, according to Bernstein. The new class of diabetes and obesity medications such as Novo Nordisk’s Ozempic and Wegovy and Eli Lilly’s Mounjaro and Zepbound dampen a patient’s appetite. With many who take these drugs reporting that they’re tending to eat more protein-rich foods like soup and less sweets, Bernstein upgraded its rating on the food company to outperform from market perform and raised its price target by $3 to $58, implying more than 22% upside from Friday’s close. “Having been rather out of favor for many years before the pandemic, soup volumes now seem to be in recovery,” analyst Alexia Howard said in a Monday note to clients. “This may be partially attributable to the fact that GLP-1 patients report that soup is a go to meal, since it is easier to consume protein and calories through drinking them than eating a full meal if you are not feeling particularly hungry.” Not only that, the analyst believes that Campbell’s more indulgent products like Pepperidge Farm’s Milano cookies could benefit from GLP-1 users’ eating habits too as they turn to “more luxurious options for a smaller, less frequent treat.” Wall Street is less bullish on the name, however. Among the 20 analysts covering Campbell, only five have a strong buy or buy rating, while 12 have a hold rating. The stock has an average price target of $51.37, implying more than 8% upside, as of Friday’s close. Howard also noted that current survey data and channel checks suggest that the market for these drugs may be larger than previously anticipated, saying that growth seems to be “only just taking off.” According to Howard, it has been difficult to gauge the number of people taking these drugs because shortages of these medications allowed compounding pharmacies to make versions of the medications that aren’t easily tracked. In addition, the analyst anticipates that reduced chocolate consumption from GLP-1 intake may hinder U.S. chocolate volumes by 2% to 3%. With that, she downgraded Hershey to market perform from outperform and cut her target on the stock by $25 to $205. That implies nearly 7% upside from Friday’s close. “Unfortunately, chocolate category volumes remain stubbornly negative and Hershey’s chocolate volumes also remain weak despite lapping easier and easier comparables in recent months,” Howard continued. “We suspect that the GLP-1 drug impact may be adding some extra pressure to the company’s volume trajectory, and this could continue in 2025.” The call joins the Street’s largely neutral stance on the chocolate company, as 18 of the 25 analysts covering the name have a hold rating. Meanwhile, only four have a strong buy or buy rating, and its average target of $202.14 implies a gain of about 5% ahead. While shares of Hershey have risen nearly 3% in 2024, they’ve slid about 4% in the past one month. Similarly, Campbell shares have jumped more than 9% year to date but fallen nearly 9% in the past one month.
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