Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 21 Aug, 25 | FRPT | Buy | USD 60.9 | USD 63.9 | USD 66.9 | 26 days | Closed |
13.55%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Freshpet, Inc., together with its subsidiaries, manufactures, distributes, and markets natural fresh meals and treats for dogs and cats in the United States, Canada, and Europe. It offers dog food, cat food, and dog treats under the Freshpet brand name; and fresh treats under the Dognation and Dog Joy brand names. The company sells its products through a network of company-owned branded refrigerators, the Freshpet Fridges, as well as through various classes of retail, including grocery, mass, club, pet specialty, and natural, as well as online. The company was incorporated in 2004 and is headquartered in Bedminster, New Jersey.
EBITDA Growth Momentum: Adjusted EBITDA increased 26.5% year-over-year to USD 44.4 million in Q2FY25, up from USD 35.1 million in Q2FY24
Return to Profitability: Net income rose to USD 16.4 million in Q2 2025 compared to a net loss of USD 1.7 million in Q2 2024, highlighting a strong turnaround in profitability
Reduced Sales Growth Guidance: Management lowered full-year 2025 net sales growth guidance to 13%–16%, down from the earlier range of 15%–18%, reflecting a more cautious outlook amid weaker consumer sentiment
Decline in Operating Cash Flow: Operating cash flow for the first six months of 2025 decreased by USD 9.1 million compared to the prior year, largely due to higher incentive compensation payments
Freshpet’s growth prospects are exposed to risks from rising operating expenses, heightened reliance on consumer spending in a weaker economic environment, and significant capital requirements to fund expansion
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 60.9 | 53.0 | 63.9 | 66.9 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Strong Revenue and Profit Growth in Q2 2025: Freshpet, Inc. reported net sales of USD 264.7 million for the second quarter of 2025, representing a 12.5% increase compared to USD 235.3 million in the same period of the prior year. This growth was primarily driven by a 10.8% increase in sales volume and a favorable price/mix contribution of 1.7%. For the first six months of 2025, net sales rose 15.0% to USD 527.9 million, reflecting both strong consumer demand and the effectiveness of its distribution and marketing initiatives.
Improvement in Profitability and Margins: Gross profit for Q2 2025 was USD 108.2 million, or 40.9% of net sales, compared to USD 94.0 million, or 39.9%, in Q2 2024. On an adjusted basis, gross profit stood at USD 124.0 million, or 46.9% of sales, versus USD 108.0 million, or 45.9%, a year earlier. The margin improvement was primarily attributed to lower input and quality costs, which offset reduced leverage on plant expenses. For the first six months of 2025, gross profit increased to USD 212.0 million, up from USD 182.1 million in the prior year, with adjusted gross profit rising to USD 244.3 million, or 46.3% of sales.
Disciplined Expense Management and SG&A Trends: Selling, general, and administrative expenses (SG&A) for Q2 2025 decreased to USD 90.4 million, compared to USD 95.7 million in the prior year period. As a percentage of sales, SG&A fell by 660 basis points to 34.1%. Adjusted SG&A for the quarter was USD 79.6 million, representing 30.1% of sales versus 31.0% in Q2 2024. However, for the first half of 2025, SG&A increased to USD 205.7 million from USD 175.4 million in the prior year, primarily due to higher media spending and non-recurring charges recorded in Q1 2025. Adjusted SG&A was USD 164.3 million, or 31.1% of sales, in line with 31.3% in the same period of 2024.
Earnings Performance and Profitability Metrics: The company delivered net income of USD 16.4 million in Q2 2025 compared to a net loss of USD 1.7 million in Q2 2024, supported by higher sales, improved margins, and lower SG&A. For the six-month period, however, net income declined to USD 3.7 million from USD 16.9 million in the prior year due to increased operating expenses, higher advertising spend, and non-recurring charges, partially offset by stronger gross profit. Adjusted EBITDA for Q2 2025 was USD 44.4 million, up from USD 35.1 million in Q2 2024, while for the first six months it rose to USD 79.9 million versus USD 65.7 million a year earlier.
Balance Sheet and Liquidity Position: As of June 30, 2025, Freshpet reported cash and cash equivalents of USD 243.7 million alongside total debt of USD 396.2 million, net of issuance costs. Operating cash flow for the first six months stood at USD 38.7 million, representing a USD 9.1 million decline from the prior year, primarily due to higher variable incentive compensation payments in Q1 2025. Management emphasized its intent to utilize the balance sheet to fund long-term capacity expansion and operational efficiency initiatives.
Revised Outlook and Strategic Adjustments: For full year 2025, Freshpet revised its sales growth guidance to 13%–16%, down from the prior 15%–18% range, citing a weaker consumer environment. Adjusted EBITDA guidance remains unchanged at USD 190 million to USD 210 million, while capital expenditures are now expected to be approximately USD 175 million, down from USD 225 million. Looking to 2027, the company has withdrawn its USD 1.8 billion sales target but reaffirmed its long-term margin ambitions, targeting a 48% adjusted gross margin and 22% adjusted EBITDA margin.
CEO Commentary on Growth and Resilience: Chief Executive Officer Billy Cyr emphasized that, despite a more constrained consumer sentiment, Freshpet continues to outperform the broader dog food category, delivering leading growth and operational improvements. The company remains focused on accelerating advertising and distribution while reducing capital expenditures and maintaining pragmatic flexibility in light of economic headwinds. Management reiterated its confidence in long-term growth and value creation, despite the revised sales outlook.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Freshpet, Inc. (NASDAQ: FRPT) at the closing market price of USD 60.90, as on August 20, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Consumer Defensive Industry: Packaged Foods
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| FRPT Freshpet Inc |
1.35 2.12% | 65.32 | 292.17 | 84.03 | 4.21 | 4.07 | 4.40 | 41.12 |
| NSRGF Nestle SA |
1.15 1.17% | 99.75 | 26.86 | 18.76 | 3.13 | 7.10 | 3.81 | 21.70 |
| NSRGY Nestle SA ADR |
1.42 1.45% | 99.62 | 26.82 | 18.66 | 3.18 | 7.07 | 3.81 | 21.70 |
| KHC Kraft Heinz Co |
0.21 0.87% | 24.89 | 15.59 | 11.79 | 1.64 | 0.88 | 2.34 | 11.32 |
| DANOY Danone PK |
0.18 1.00% | 18.25 | 28.42 | 16.39 | 1.44 | 2.23 | 1.85 | 12.41 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is August 20,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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