Benchmark cuts Freshpet stock price target to $140, maintains Buy

On Tuesday, Benchmark analyst Todd Brooks adjusted the price target for Freshpet (NASDAQ:FRPT), currently trading at $81.24 with a market capitalization of $3.96 billion, to $140 from the previous $195 while retaining a Buy rating on the stock. Brooks cited short-term challenges impacting the company’s growth projections. According to InvestingPro data, the stock has shown resilience with a notable 9.59% gain over the past week, despite broader market volatility. The revised target reflects both a decrease in expected volume growth due to consumer pressures and a temporary revenue setback in the Pet Specialty channel. This setback is attributed to distribution disruptions following the late February acquisition of Freshpet’s distributor, which led to inventory shortages.

Brooks remains optimistic about Freshpet’s long-term prospects, noting the company’s strong position in the fresh dog food market at physical retail locations. The company maintains a GOOD overall Financial Health score according to InvestingPro analysis, with particularly strong metrics in growth and cash flow management. Despite the near-term headwinds, he believes Freshpet is on track to achieve the $400 million in adjusted EBITDA by fiscal year 2027 as forecasted by management at the CAGNY Conference earlier in the quarter. InvestingPro’s Fair Value analysis suggests the stock may be currently undervalued. However, Brooks has incorporated more conservative short-term volume growth assumptions into his analysis, which are supported by Nielsen scanner data showing a 16% year-over-year dollar growth in the first quarter of 2025.

The analyst has also adjusted the valuation multiple to 26 times forward adjusted EBITDA, down from the previous multiple. This change reflects the recent volatility in the market and consumer behavior, which has prompted a more cautious outlook. Despite these adjustments, Brooks maintains a positive view on the stock, underlined by his continued Buy recommendation.

Freshpet’s stock price adjustment comes at a time when the company faces immediate distribution challenges. However, the Benchmark analyst’s report suggests confidence in the company’s ability to navigate through these issues and capitalize on its dominant market share in the fresh dog food sector.

Investors are now watching Freshpet closely as it works to resolve the distribution issues and strives to meet its longer-term financial goals. With analysts projecting 21% revenue growth for the current fiscal year and maintaining a bullish consensus recommendation, the company’s performance in the coming quarters will be telling of its resilience and ability to adapt to the dynamic consumer and market conditions. For deeper insights into Freshpet’s valuation and growth prospects, investors can access comprehensive analysis and 14 additional ProTips through InvestingPro’s detailed research reports.

In other recent news, Freshpet has seen several adjustments to its stock price targets and financial forecasts from various analyst firms. Stifel has lowered its price target for Freshpet to $115, citing weakening sales and volume trends in the pet food industry, and adjusted their full-year sales growth projection for 2025 to 18%, below the consensus of 21%. Truist Securities also reduced its price target to $110, attributing the change to adjustments in their sales and adjusted EBITDA estimates, while maintaining a Buy rating. Similarly, Citi has decreased its price target to $96, expressing concerns over deceleration in growth and uncertainties about future consumption trends, while keeping a Neutral stance.

TD Cowen has cut its price target to $115, citing weakened demand among lower to middle-income consumers and challenges with out-of-stocks due to distribution issues, yet remains optimistic with a Buy rating. Piper Sandler reduced their price target to $145, noting a slowdown in revenue growth, particularly among lower and middle-income consumers, while maintaining an Overweight rating. These revisions reflect a cautious outlook on Freshpet’s near-term growth prospects but indicate continued confidence from some analysts in the company’s long-term potential. Each firm’s adjustments highlight different factors influencing Freshpet’s performance, such as distribution challenges and shifting consumer demographics. Investors are closely monitoring how Freshpet navigates these challenges and adjusts its strategies in response.

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