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Stifel resumed coverage of Freshpet (NASDAQ:FRPT) on Thursday with a buy rating and a $90 price target, balancing near-term headwinds against long-term growth potential. Currently trading at $76.87, the stock appears undervalued according to InvestingPro analysis, despite experiencing high volatility with a 47% decline over the past six months.
The research firm acknowledged current challenges facing the pet food company, including weak category trends and slowing sales growth, which led Stifel to set estimates below consensus. Despite these concerns, Stifel expects improved sales growth in the second half of 2025. The company has maintained strong revenue growth of 23.24% over the last twelve months, generating over $1 billion in revenue.
Stifel’s bullish stance stems from Freshpet’s "long runway of growth," which the firm believes will be supported by increasing household penetration and margin expansion over the next two years.
The research firm projects that Freshpet’s EBITDA growth will significantly outpace revenue growth during this period, benefiting from the company’s scale and improved operational efficiency.
Stifel noted that Freshpet is progressing toward its 2027 EBITDA margin target of 22%, which would represent 540 basis points of margin expansion over the next three years.
In other recent news, Freshpet’s financial performance has been a focal point for analysts. Benchmark analyst Todd Brooks revised the company’s price target to $120, maintaining a Buy rating, following Freshpet’s first-quarter 2025 results. The company reported revenue of $263 million, an 18% year-over-year increase, surpassing the expected $258 million. Despite this growth, Freshpet’s adjusted earnings per share slightly missed expectations, coming in at $0.08 compared to the consensus of $0.10. Meanwhile, TD Cowen downgraded Freshpet’s stock from Buy to Hold, setting a price target of $96, citing concerns over slowing retail sales growth and potential market saturation for its products.
DA Davidson retained a Buy rating with a $127 price target, suggesting that Freshpet’s strategic changes could lead to a recovery. Jefferies also adjusted Freshpet’s price target to $138, maintaining a Buy rating and noting the company’s efforts to adapt its strategies to current economic conditions. Freshpet has revised its guidance for 2025, projecting revenue growth between 15% and 18%, with adjusted EBITDA expected to be in the range of $190 million to $210 million. Analysts are closely watching Freshpet’s strategic initiatives and their potential impact on the company’s performance in the latter half of the year.
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