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On Tuesday, TD Cowen adjusted its outlook on Freshpet shares (NASDAQ:FRPT), lowering the price target from $115.00 to $96.00, while maintaining a Buy rating on the stock. Currently trading at $80.62, the company has seen its shares decline nearly 50% over the past six months, according to InvestingPro data, which shows the stock maintains a "GOOD" overall financial health score. The adjustment comes as Freshpet recalibrates its 2025 sales guidance to a growth rate of 15-18%. This shift acknowledges the likelihood that the company’s current slower growth pace will persist throughout the year. The company has demonstrated strong historical performance with a 32% revenue CAGR over the past five years, though InvestingPro analysis indicates it’s currently trading at relatively high earnings and EBITDA multiples.
The firm’s analyst believes that a more conservative guidance of 13-15% would be appropriate given recent trends. Nonetheless, the analyst sees a favorable risk-reward scenario for the stock, citing its valuation and the company’s ability to adapt operationally by adjusting costs and capacity expansion plans accordingly.
The new price target of $96.00 is based on a 17.0x multiple of the company’s projected 12-month forward EBITDA. This valuation is at the lower end of the historical 16-25x range of takeout multiples for high-growth pet food companies.
Freshpet’s updated sales guidance reflects a strategic response to the current market conditions, suggesting a more measured growth trajectory for the near future. The company’s operational flexibility is highlighted as a key factor in maintaining its investment appeal despite the slower growth environment.
TD Cowen’s revised price target and sustained Buy rating indicate a continued confidence in Freshpet’s market position and long-term potential, despite the need for adjustments in the face of current growth patterns. The firm’s analysis suggests that Freshpet’s stock remains an attractive investment with the potential for positive returns. According to InvestingPro, which offers comprehensive analysis through its Pro Research Reports covering over 1,400 US stocks, Freshpet currently appears slightly undervalued based on its proprietary Fair Value model, with analyst targets ranging from $80 to $158 per share.
In other recent news, Freshpet Inc . reported a surprising loss in its Q1 2025 earnings, with an earnings per share (EPS) of -$0.26, significantly missing the forecasted $0.15. Despite this, the company achieved an 18% year-over-year revenue growth, reaching $263.2 million, although this too fell short of expectations. Freshpet has set its 2025 net sales guidance at $1.120-$1.150 billion, indicating a 15-18% growth, and projects an adjusted EBITDA of $190-$210 million. Analyst firms have responded to these developments with varied outlooks. DA Davidson maintained a Buy rating and a $127 price target for Freshpet, expressing cautious optimism about the company’s recovery prospects. Jefferies, meanwhile, adjusted Freshpet’s price target to $138 from $140 but retained a Buy rating, noting strategic revisions aimed at improving returns in the latter half of the year. Freshpet is focusing on affordability and altering its marketing approach to navigate the current economic climate, with the hope of bolstering performance moving forward.
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