What Happened?
Shares of pet food company Freshpet (NASDAQ:FRPT) jumped 8.9% in the afternoon session after the company reported second-quarter earnings that significantly beat analyst expectations, overshadowing a weaker-than-expected revenue figure and a reduced full-year sales forecast.
The pet food maker posted earnings per share of $0.33, a sharp reversal from a loss in the same quarter a year ago and well ahead of estimates. However, net sales, while up 12.5%, missed expectations. The company also trimmed its full-year sales growth guidance and removed its 2027 net sales target. Investors appeared to focus on the strong profitability, as the company maintained its full-year adjusted EBITDA forecast and lowered its planned capital spending for the year.
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What Is The Market Telling Us
Freshpet’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 13 days ago when the stock gained 6.2% on the news that Jefferies upgraded the stock, citing strong growth prospects for the company. The investment firm raised its rating on the stock to “Buy” from “Hold” and boosted its price target to $150 from $115. Jefferies analyst Rob Dickerson pointed to the company's accelerating sales growth and expanding retail footprint as key reasons for the bullish turn. The analyst noted that Freshpet is successfully adding new manufacturing capacity, or "Kitchens," and increasing the number of its branded refrigerators in stores, which should fuel further growth. This expansion is expected to not only drive top-line revenue but also lead to improved profitability through margin expansion as the company scales its operations. The new $150 price target suggests a significant potential upside for the shares.
Freshpet is down 50.6% since the beginning of the year, and at $71.32 per share, it is trading 56.1% below its 52-week high of $162.59 from January 2025. Investors who bought $1,000 worth of Freshpet’s shares 5 years ago would now be looking at an investment worth $680.62.
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