Piper Sandler cuts Freshpet stock price target to $145 from $160

On Tuesday, Piper Sandler adjusted its price outlook for Freshpet stock (NASDAQ:FRPT), reducing the price target from $160.00 to $145.00 while retaining an Overweight rating on the company’s shares. According to InvestingPro data, analysts’ targets currently range from $102 to $195, with the stock trading at $88.76. InvestingPro analysis indicates the stock is currently undervalued based on its Fair Value model. The revision comes as Freshpet experiences a deceleration in revenue growth, particularly among lower and middle-income consumers. While the company achieved impressive revenue growth of 27.16% in the last twelve months, reaching $975.18 million, this demographic has shown a significant slowdown, with household penetration growth for Freshpet half of what it was a year prior. Despite this downturn, higher-income consumers continue to show robust household penetration gains, up in the mid-twenty percent range.

The company is also facing some immediate challenges that could impact its first-quarter performance in 2025. These include disruptions with pet specialty distributors and the effect of having one fewer shipping day due to the leap year. These factors are contributing to the anticipation that Freshpet will likely hit the lower end of its financial guidance for the year 2025. InvestingPro subscribers can access 14 additional key insights about Freshpet’s financial health and market position through exclusive ProTips.

In light of these developments, Piper Sandler has also revised its sales projections for Freshpet. The firm now estimates that Freshpet’s sales for 2025 will be approximately $1,180 million, a decrease from the earlier forecast of around $1,200 million. Similarly, the sales estimate for 2026 has been adjusted from approximately $1,470 million to around $1,445 million. Despite these revisions, InvestingPro data shows analysts still anticipate strong sales growth of 23% for the current year.

The analysis reflects concerns over the near-term outlook for Freshpet’s growth, particularly with regard to the mainstream consumer segment. The adjustments made by Piper Sandler in their financial models suggest a cautious approach to the company’s short-term revenue prospects, even as they maintain a positive overall rating on the stock.

In other recent news, Freshpet has been at the center of several analyst updates. Jefferies reiterated its Buy rating with a revised price target of $150, highlighting Freshpet’s strong quarterly performance and the potential for sales growth at a compound annual rate of 23% through 2027. Despite a downgrade in price target from $170 to $140, Truist Securities maintained a Buy rating, emphasizing Freshpet’s growth opportunities and strategic initiatives shared during a session with the company’s CEO and CFO. DA Davidson also reaffirmed its Buy rating, keeping a price target of $189, noting adjustments in sales projections but confidence in Freshpet’s advertising-driven customer adoption rates.

TD Cowen adjusted its price target from $174 to $141 while maintaining a Buy rating, pointing to a temporary dip in the dog food category that impacted Freshpet’s fourth-quarter sales. The firm expects a rebound in the company’s growth as market conditions stabilize. Analysts from Jefferies noted the stock’s valuation at a five-year low and expressed confidence in the company’s ability to capitalize on the pet premiumization trend. This trend, where consumers prefer high-quality pet products, is seen as a key driver for Freshpet’s future growth.

These recent developments reflect a mixed yet optimistic outlook from analysts, with a focus on Freshpet’s strategic positioning and potential for recovery in the pet food market. Investors are closely monitoring Freshpet’s performance and market share, particularly in light of the company’s strategic initiatives and evolving consumer trends.

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