Campbell's (CPB) higher promotional activities and marketing investment should help the top line, but RBC Capital Markets said in a Monday note that its sentiment remains subdued heading into fiscal Q2 earnings.

The brokerage said Q2 was likely supported by pantry loading ahead of the January winter storm, which will end up being a pull-forward from fiscal Q3. Any headline upside in Q2 could be initially misleading as short-term demand trends are expected to remain largely unchanged.

Heightened competition in the snacks division, including FritoLay relaunching Lay's and Tostitos and cutting prices, is likely to make a recovery more challenging. Goldfish is under pressure and Campbell's has not yet signaled any pricing response.

Recent leadership changes, including Mohit Anand joining the Snacks division and a new chief supply chain officer, suggest prior improvement initiatives were not fully effective.

Despite appearing inexpensive, RBC said the risk/reward skews to the downside with no clear catalyst other than category improvement, the timing of which remains uncertain.

Campbell's is scheduled to report fiscal Q2 results on Wednesday.

RBC has a sector perform rating on Campbell's with a $30 price target.

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