Campbell's (CPB) is likely to reiterate its full-year outlook but potentially "talk down" its fiscal Q2 expectations due to "deteriorating" two-year sales trends, Morgan Stanley said in a report Friday.

The firm expects fiscal Q1 results to come in largely "in line" with Wall Street estimates, with organic sales projected to decline about 2.1% and adjusted earnings seen at $0.74 per share, matching consensus. US scanner data showed modest sequential improvement early in the quarter, though the investment bank said the lift was driven mostly by easier comparisons in soup and "timing-related benefits" in the Rao's brand, according to the report.

Morgan Stanley said tougher soup comparisons, heightened "snacks promotions" and potential fallout from recent "boycott noise" tied to comments by a former executive are clouding visibility for the rest of the quarter. Given these headwinds, the firm lowered its fiscal Q2 organic sales estimate to a 1.7% decline, from a prior forecast for 0.8% growth, and trimmed its earnings per share estimate to $0.60.

A new chief financial officer may also choose to "reset" expectations to create a more achievable near-term setup, the report said, adding that sentiment around Campbell "remains overwhelmingly negative," and the company has yet to show a sustained improvement in snack volumes.

Morgan Stanley maintained an equal weight rating on Campbell's, and lowered its price target to $30 from $33.

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