DA Davidson maintains Freshpet stock buy rating, $189 target

On Monday, DA Davidson reaffirmed its Buy rating on Freshpet stock (NASDAQ:FRPT) with a consistent price target of $189.00. The firm’s analyst, Brian Holland, adjusted the company’s estimates, citing a decrease in net sales projections but an increase in general and administrative (G&A) cost leverage. Despite this adjustment, the price target remains unchanged due to a combination of a lower multiple and higher estimates.

Holland’s commentary highlighted that while recent consumption has decelerated, it still falls within their forecasts. The analyst emphasized the strong correlation between advertising efforts and customer adoption rates for Freshpet’s products. According to Holland, as long as the current model continues to hold, their confidence in the company’s performance remains unshaken. This confidence appears supported by the company’s strong revenue growth of 27.16% over the last twelve months, with analysts on InvestingPro forecasting continued sales growth of 24% for the upcoming fiscal year.

The analyst also noted that Freshpet’s management outlook aligns almost perfectly with their expectations. One notable exception is the company’s revised long-term EBITDA margin targets for fiscal year 2027, which are now 200 basis points higher than what was previously modeled by DA Davidson. The company’s current EBITDA stands at $112.2 million, with InvestingPro analysis indicating a FAIR overall financial health score, suggesting stable operational performance. InvestingPro subscribers can access 15+ additional insights and detailed financial metrics in the comprehensive Pro Research Report.

Freshpet’s commitment to advertising and the observed impact on adoption rates appear to be key factors in DA Davidson’s analysis. The firm’s stance suggests that they believe in the company’s strategic marketing approach and its potential to drive growth.

The reaffirmed $189.00 price target by DA Davidson reflects the firm’s belief that Freshpet will continue to perform well, despite the slight adjustments made to the company’s financial estimates. The analyst’s remarks conclude with a reiteration of their Buy rating, signaling confidence in Freshpet’s market position and future prospects.

In other recent news, Freshpet has been the focus of several analyst updates following its fourth-quarter earnings announcement. Jefferies upgraded Freshpet’s stock from Hold to Buy, although they reduced the price target to $150, citing robust quarterly performance and optimistic future projections. They expect the company’s sales to grow at a compound annual rate of 23% through 2027. Meanwhile, TD Cowen also maintained a Buy rating but lowered the price target to $141, reacting to Freshpet’s fourth-quarter sales falling short of expectations and a slower growth forecast for 2025. TD Cowen remains optimistic about a recovery, attributing the slower growth to temporary factors in the dog food category.

Similarly, Stifel adjusted its price target to $155 while maintaining a Buy rating, noting that Freshpet’s sales and adjusted EBITDA estimates remain largely unchanged. Stifel sees long-term potential in the company’s market share gains. Piper Sandler also cut the price target to $160 but kept an Overweight rating, emphasizing the company’s attractive growth trajectory despite production capacity limitations. Lastly, Citi reduced the price target to $123 and maintained a Neutral rating, pointing to Freshpet’s decelerated sales growth and the need for significant sales increases to meet future targets. Despite these challenges, Citi remains optimistic about Freshpet’s EBITDA margin improvements.

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