Campbell's (CPB) could face muted organic sales growth on the back of struggling snacks business, Morgan Stanley said in a Tuesday note.

"We expect OSG to remain muted given persistent snacks category challenges," the report said.

"We believe protecting EPS in FY26 will be challenging should tariffs remain in place, while at the same time acknowledging compressed relative valuation vs. history."

The report said underlying OSG remained weak in Q3, down 1% on continued struggles in the snacks segment with 5% volume declines accelerating sequentially against last quarter's 2%.

While Campbell's will continue to benefit from cost saving efforts, the company will also face with headwinds such as tariffs and incentive compensation resetting, the report said.

Morgan Stanley now estimates the company's fiscal 2025 EPS at $2.90, down from $2.95 previously. It cut its price target on the stock to $35 from $40 while keeping its equal-weight rating.

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