Balanced Outlook on Freshpet: Hold Rating Amid Sales Miss and Growth Challenges

Analyst Thomas Palmer of Citi maintained a Hold rating on Freshpet (FRPT – Research Report), reducing the price target to $123.00.

Thomas Palmer has given his Hold rating due to a combination of factors impacting Freshpet’s stock. The company recently experienced a significant decline in its stock value following a sales miss in the fourth quarter of 2024 and an underwhelming sales growth outlook for 2025, which fell short of consensus expectations. The slowdown in sales growth is more pronounced than anticipated, which could challenge the company’s ability to meet its ambitious sales target of $1.8 billion by 2027.
However, Thomas Palmer remains neutral about Freshpet’s shares as there are positive aspects to consider. The company has demonstrated potential for higher earnings, supported by an encouraging outlook on EBITDA margin improvements. Moreover, management’s strategies to bolster these margins, along with potential catalysts for organic sales growth, provide a balanced view. Despite the slowdown, the company’s focus on new marketing strategies, expansion into new retail channels, and the possibility of transient factors affecting pet food sales, suggest there is room for optimism regarding future growth.