TD Cowen cuts Freshpet stock target to $115, keeps Buy rating

On Tuesday, TD Cowen analysts adjusted their outlook on Freshpet shares (NASDAQ:FRPT), currently trading at $86.23 with a market capitalization of $4.19 billion, reducing the price target to $115 from the previous $141 while maintaining a Buy rating on the stock. The revision reflects a more cautious stance due to a combination of factors impacting the company’s performance. According to InvestingPro data, the stock has experienced significant volatility, falling over 36% in the past six months.

The analysts at TD Cowen noted that they have revised Freshpet’s sales and profit forecasts to the lower end of the company’s full-year 2025 guidance, despite InvestingPro data showing an expected revenue growth of 23% for FY2025. This adjustment includes expectations for below-the-range results in the first quarter. They attributed the revision to a weakened demand among the brand’s low-to-middle income customer base. InvestingPro analysis indicates that 4 analysts have recently revised their earnings expectations downward for the upcoming period.

Freshpet has also experienced challenges with out-of-stocks in pet specialty stores due to disruptions with a new distribution partner. The analysts anticipate that Freshpet will see sequential improvement in the second quarter as the company adjusts its marketing strategy and resolves its distribution issues.

The report by TD Cowen suggests that despite the near-term headwinds, the analysts remain positive about Freshpet’s long-term prospects. The Buy rating indicates their belief in the company’s ability to navigate through the current challenges and capitalize on future opportunities.

In their commentary, the analysts stated, "We lower our Freshpet sales and profit to the low end of FY25 guidance, including below-the range results in 1Q. Demand in the brand’s low-to-middle income cohort has weakened, and they had out-of-stocks in pet specialty from disruptions at a new distribution partner. We expect sequential improvement in 2Q as the company pivots its marketing strategy and pet specialty distribution recovers."

Investors and stakeholders in Freshpet will be monitoring the company’s performance closely in the coming quarters to see if the anticipated improvements materialize as predicted by TD Cowen analysts. For deeper insights into Freshpet’s valuation and growth prospects, InvestingPro subscribers can access comprehensive analysis, including 16 additional ProTips and a detailed Pro Research Report, which transforms complex financial data into actionable intelligence for smarter investing decisions.

In other recent news, Freshpet has seen notable developments concerning its financial outlook and analyst ratings. Piper Sandler revised its price target for Freshpet, reducing it from $160 to $145, while maintaining an Overweight rating. This adjustment follows a slowdown in revenue growth, particularly among lower and middle-income consumers, and the anticipation that Freshpet will hit the lower end of its financial guidance for 2025. Piper Sandler also adjusted its sales projections, estimating 2025 sales at $1,180 million, down from $1,200 million, and 2026 sales at $1,445 million, down from $1,470 million.

Jefferies maintained a Buy rating on Freshpet with a $150 price target, highlighting the stock’s valuation as attractive despite short-term category slowdowns. The firm remains optimistic about the pet industry’s long-term prospects and Freshpet’s potential within it. Truist Securities also adjusted its price target for Freshpet, lowering it from $170 to $140, while maintaining a Buy rating. This decision was influenced by contracting multiples of Consumer Packaged Goods growth stocks, despite insights from a session with Freshpet’s CEO and CFO.

DA Davidson reaffirmed its Buy rating with a consistent price target of $189, noting a decrease in net sales projections but an increase in G&A cost leverage. The analyst emphasized the strong correlation between advertising efforts and customer adoption rates. Jefferies upgraded Freshpet from Hold to Buy, although it reduced the price target to $150 from $155. The firm anticipates a compound annual sales growth rate of 23% through 2027, driven by the pet premiumization trend and expanding profit margins.

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