UBS Issues Sell Rating on Freshpet Due to Overly Optimistic Growth Expectations and Declining Sales Trends

Freshpet (FRPT) has received a new Sell rating, initiated by UBS analyst, .

UBS has given its Sell rating due to a combination of factors impacting Freshpet’s growth and valuation. The firm believes that the current market expectations for Freshpet’s revenue growth are overly optimistic, with estimates for both top and bottom lines being too high. UBS points out that Freshpet is experiencing weaker trends in purchase frequency, repeat rates, and sales velocity, which have all declined year-over-year.
Additionally, UBS anticipates a modest decline in sales estimates for the coming years, with a particular focus on the company’s ambitious household reach targets. The report suggests that these targets may be difficult to achieve due to limited new market opportunities and other constraints such as affordability and product suitability. Furthermore, UBS’s EBITDA forecasts for Freshpet are significantly below consensus, casting doubt on the company’s ability to expand margins as expected. Consequently, UBS has set a price target of $65, reflecting a potential downside of 15%, based on a blend of valuation methodologies.

Based on the recent corporate insider activity of 58 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of FRPT in relation to earlier this year.