Benchmark cuts Freshpet stock target to $120, maintains Buy rating

On Tuesday, Benchmark analyst Todd Brooks revised the price target for Freshpet (NASDAQ:FRPT) to $120 from $140, while continuing to endorse the stock with a Buy rating. The adjustment followed Freshpet’s first-quarter 2025 operating results, which were disclosed before the market opened on Monday. According to InvestingPro data, the stock currently trades at a P/E ratio of 250x and appears slightly undervalued based on its Fair Value analysis. Despite recent volatility, with the stock down nearly 50% over the past six months, analysts maintain an optimistic outlook with a consensus Buy rating. The company’s financial performance slightly surpassed consensus expectations, with revenue reaching $263 million, an 18% year-over-year increase, and exceeding the forecasted $258 million. This revenue growth was attributed to a 14.9% increase in volume and a 2.7% rise in price/mix. The company has maintained strong momentum, with InvestingPro showing trailing twelve-month revenue of $1.01 billion and a robust five-year revenue CAGR of 32%.

The adjusted gross margin for Freshpet was reported at 45.7%, a 40 basis points improvement from the previous year and 280 basis points higher than consensus estimates. The improvement in margin was attributed to lower input costs and enhanced quality metrics. InvestingPro analysis reveals the company maintains healthy liquidity with a current ratio of 4.91 and operates with a moderate debt level, supporting its growth trajectory. For deeper insights into Freshpet’s financial health and 13 additional ProTips, subscribers can access the comprehensive Pro Research Report. Despite one-time charges amounting to $16.8 million, Freshpet’s adjusted earnings per share (AEPS) came in at $0.08, slightly below the consensus of $0.10. The company’s adjusted earnings before interest, taxes, depreciation, and amortization (AEBITDA) were $35.5 million, surpassing the consensus estimate of $34.1 million. The company’s trailing twelve-month EBITDA stands at $103.2 million, demonstrating consistent operational performance despite market challenges.

In response to the current consumer environment, Freshpet management has projected this trend to persist throughout the fiscal year 2025 and has accordingly adjusted its full-year guidance. The company now expects revenue growth to be between 15% and 18%, with AEBITDA anticipated to be in the range of $190 million to $210 million, a decrease from the previous guidance of over $210 million.

Brooks commended Freshpet’s cautious stance on guidance, considering the current knowledge about consumer behavior. However, due to the revised forecast for the fiscal years 2025 and 2026 AEBITDA, the price target was lowered to $120, which is based on a 25 times multiple of the projected fiscal year 2026 AEBITDA. Despite the reduced price target, Benchmark maintains a positive outlook on Freshpet shares with a continued Buy rating.

In other recent news, Freshpet reported an unexpected loss in its Q1 2025 earnings, with an earnings per share (EPS) of -$0.26, missing the anticipated $0.15. The company did achieve an 18% year-over-year revenue growth to $263.2 million, although this also fell short of the forecasted $265.01 million. Freshpet has adjusted its 2025 net sales guidance to $1.120-$1.150 billion, indicating a growth rate of 15-18%. Despite these setbacks, several analyst firms maintain a positive outlook on Freshpet. DA Davidson continues to hold a Buy rating with a $127 price target, citing the company’s potential recovery due to strategic initiatives and market conditions. Jefferies also retains a Buy rating, adjusting the price target slightly to $138, while noting Freshpet’s strategic focus on affordability and marketing adjustments. Meanwhile, TD Cowen has lowered its price target from $115 to $96, maintaining a Buy rating and emphasizing the company’s operational flexibility and strategic response to market conditions. These developments highlight Freshpet’s ongoing efforts to navigate the current economic landscape and adapt its strategies for future growth.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.