CNBC’s Jim Cramer has advised investors to “stay on the sidelines” regarding Vital Farms (VITL) stock after the egg producer revealed an accounting issue in its financial statements. The company’s strong results were quickly overshadowed by internal control issues in order tracking and invoicing, which it attributed to ineffective risk management and resource shortages. As a result, Vital Farms’ stock price dropped over 9% on Thursday, erasing all its premarket gains.
Vital Farms is a U.S. food company specializing in pasture-raised eggs and dairy products. Over the past year, VITL stock has surged more than 75%, fueled by rising egg prices amid the U.S. bird flu outbreak. However, the USDA’s recent $1 billion initiative to control the outbreak and stabilize prices may reduce egg prices, potentially affecting Vital Farms.
Cramer’s Take on VITL Stock
On his CNBC show, Cramer told viewers that when you see accounting issues pop up, that’s a major red flag. The veteran market commentator and a well-known investment adviser suggested its viewers keep an eye on Vital Farms, as it could be a strong investment once it resolves its bookkeeping issues. He further stated that accounting problems often signal deeper issues within a company’s operations or management practices. He advised investors to wait for audited financial reports before considering the stock.
In response, Vital Farms stated that it is conducting a thorough internal review with assistance from independent accounting experts. The company plans to provide updated financial information once the review is complete but has not given a specific timeline.
Jefferies Analyst Stays Bullish on Vital Farms
Jefferies analyst Rob Dickerson stays bullish on VITL stock despite the accounting control issues. He noted that Vital Farms (VITL) exceeded expectations for both Q4 and FY25. In context, the company’s Q4 revenue grew 22.2% year-over-year to $166 million, exceeding analyst expectations of $159.9 million. For FY25, Vital Farms expects $740 million in revenue at the midpoint, 4.7% above estimates.
Jefferies believes the risk is minimal and that no financial restatements will be needed. Dickerson reaffirmed its Buy rating with a $46 price target, seeing the stock’s dip as a buying opportunity.
Is VITL a Buy?
On TipRanks, VITL stock has a consensus Strong Buy rating among nine Wall Street analysts. That rating is based on seven Buys and two Holds assigned in the last three months. Meanwhile, the average Vital Farms share price target of $44.67 implies a 45% upside from current levels.
