What Happened?
Shares of pet food company Freshpet (NASDAQ: FRPT) jumped 6.2% in the morning session after 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.
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What Is The Market Telling Us
Freshpet’s shares are very volatile and have had 20 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 biggest move we wrote about over the last year was 5 months ago when the stock dropped 19.5% on the news that the company reported disappointing fourth-quarter results: its gross margin missed significantly, and its full-year revenue guidance fell short of Wall Street's estimates.
On the other hand, Freshpet blew past analysts' EBITDA expectations. The company also guided for full-year EBITDA above Wall Street's estimates. Still, this was a softer quarter due to the worse-than-anticipated top-line momentum for 2025.
Freshpet is down 49.4% since the beginning of the year, and at $73.05 per share, it is trading 55.1% 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 $817.93.
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