Freshpet dropped another 2.9% in pre-market trading on Feb. 23 after the pet food company swung to a surprise loss in the fourth quarter. Shares closed 7.3% lower on Feb. 22.
Freshpet (FRPT) incurred a loss of $0.08 per share in 4Q, compared with earnings of $0.12 per share during the same quarter last year. Analysts had expected the company to earn $0.09 per share. Net sales jumped 28.5% to $84.5 million year-over-year but fell short of analysts’ estimates of $85.53 million. Sales during the reported quarter were driven by a rise in household penetration and buying rate.
Adjusted EBITDA in 4Q declined 2.3% to $12.9 million year-over-year. (See Freshpet stock analysis on TipRanks)
Freshpet CEO Billy Cyr said, “Clearly, our ‘Feed the Growth’ strategy is working and is proving that the upside potential for Freshpet continues to grow.”
“If we simply continued the rate with which pet parents have joined the Freshpet franchise over the past two years, we would greatly exceed our 2025 goal of having 8 million households feeding Freshpet to their pets. So, we are raising our 2025 household penetration target by 37% to 11 million households and in pursuit of that goal we will get the opportunity to satisfy millions more pets and pet parents. That will also enable us to raise our 2025 net sales target to $1.25 billion,” he added.
For 2021, the company projects net sales of $430 million, versus the consensus of $420.1 million. Adjusted EBITDA is expected to generate $61 million.
Following the 4Q results, Oppenheimer analyst Rupesh Parikh maintained a Buy rating and a price target of $175 (17.2% upside potential) on the stock, saying that “FRPT remains a top pick for us.”
Looking forward to 2021, Parikh believes “FRPT is uniquely positioned to outperform given the potential ability to lap difficult compares and sustain industry leading 30%-plus top-line growth.”
Freshpet shares have exploded almost 101% over the past year, while the stock still scores a Strong Buy consensus rating based on 6 Buys versus 1 Hold. That’s alongside an average analyst price target of $162.86, which implies upside potential of more than 9% to current levels.
Additionally, Freshpet scores an 8 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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