Well Campbell's is reporting better than expected third quarter results, benefiting from more people cooking at home as consumers seek value. Joining us now Peter Galbo, BofA Securities Food and Beverage Analyst. You've got an underperform rating and a $37 price target on Campbell's. How are you viewing these results?

Hey guys, good morning. Thank thanks for having me on. Look, I I think if you peel back, you know, a layer on on the underlying results from this morning, um, what you see is that look, the snacks business for Campbell's, which is brands like Snyder's Lance, um, Late July chips, is is kind of performing in line with the category, which has been disappointing so far. And that was a continuation of the trend uh in the quarter and and honestly on the go forward period as well. As it relates to kind of the core, you know, legacy Campbell's business that that we would all think of the, you know, the soup business. Now the Rao's brand. Um there was a bit of shipment timing that actually benefited the quarter, which the company, you know, called out. Uh underlying trends on the base business were a a touch better than what we looked for, um, but but on the whole, still remains pretty tepid from from an overall standpoint.

What do you sense about the consumer, the health of the consumer as uh according to the the the gospel according to Campbell's, if you will.

Yeah, I I think what we're seeing, Brad, as as it relates to um, the the consumer as a whole in staples, is that staples have been, you know, frankly, less stapley than we would have otherwise noted. And I know that's not, you know, the technical term. Um but what we're seeing really is is probably more discretionary activity on the on the part of the consumer in these consumable categories that are more everyday usage. Uh and that continues to be the case, particularly in categories like snacks.

And and talk to me about that category specifically. One of the big questions has been whether or not we're going to see a negative draw on companies like Campbell's due to the increased usage of GOP1s. Are we seeing any evidence of that yet?

So, it's it's a great question and and it's one that we've, you know, tried to really uh dig into a bit on. I I think what you're seeing in the snacks category as a whole, and this is emblematic of what we've seen out of names like Pepsi, um who's the large snacking player, Calinova, which has a, you know, a large snacking business, Campbell's. It it's really more probably a function of the price point. So you've seen collectively, you know, the snacks category take something like 30 points of pricing, or even a bit more than that, over the past four years, you know, while the, you know, the consumers wages just simply haven't kept up. I was part of our, you know, thesis underlying our our downgrade of Pepsi last month. Uh was simply just, look, wages have not kept up with uh with the pricing in snacks. It's a more discretionary purchase. And so, you know, it's going to take, you know, a a price correction uh to some extent on the on the part of the these companies, whether that be in pack size changes, um or an actual list pricing to try and stimulate consumer demand.

Pack size changes. Does that mean shrinkflation?

Pack size changes can mean a number of things, but but really what it is is it's trying to hit a price point. So if a consumer only has $2 in their pocket, it's about hitting a pack size uh that is at that price point.