There's a great deal of pessimism priced into CPB
A big earnings winner this morning is Campbell Soup Company (NYSE:CPB), with the packaged food titan reporting adjusted fiscal fourth-quarter earnings and revenue that topped estimates. Net sales rose by 2%, as well, while gross margin increased to 34% from 31.4%. The company cited cost-cutting, and a better focus on its mainstream businesses as reasons for the strong quarterly report.
This has Campbell Soup stock up 5.7% to trade at $45.80 this morning, earlier nabbing a fresh annual high of $45.80. CPB rode an earnings-induced bull gap to new heights back in early June, and was trading near these former highs heading into today after a big bounce off its 40-day moving average.
No bull notes have come through on CPB yet, despite the blowout report. The stock certainly seems overdue for upbeat analyst attention, which could help push the security even higher. While all seven of the brokerages in coverage rate Campbell Soup a "hold" or worse, the consensus 12-month price target sits at $39.57, a discount to current trading levels.
A short squeeze could also fuel additional gains. Short interest sits at its highest point since early May, and accounts for 13.2% of CPB's total available float. At the stock's average pace of trading, it would take shorts more than 10 days to buy back their bearish bets. This is an ample amount of buying power that could boost the stock.