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Investing.com - Stifel has resumed coverage on HelloFresh SE (ETR:HFG) (OTC:HLFFF) with a Hold rating and a price target of EUR7.90, citing concerns about the company’s growth prospects.
The research firm points to significant challenges in HelloFresh’s core meal-kit business, which represents more than 70% of the company’s sales and is currently experiencing double-digit percentage declines with "no real inflection in sight."
Stifel attributes these struggles to "years of marketing overinvestment vs. product underinvestment" that has led to "product fatigue" among consumers, according to its analysis.
The ready-to-eat segment, which accounts for less than 30% of HelloFresh’s sales, also faces challenges including high exposure to the U.S. market and intensifying competition, Stifel notes.
The research firm does not view HelloFresh shares as particularly cheap at approximately 4x EV/EBITDA, adding that the 50% discount compared to European food retailers "appears justified given the growth uncertainties," which could make medium-term EBITDA and free cash flow margins unsustainable.
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