Freshpet is viewed cautiously by Jefferies due to valuation, capacity concerns

Jefferies started off coverage on Freshpet (NASDAQ:FRPT) with a Hold rating on Tuesday.

Analyst Kaumil Gajrawala called Freshpet (FRPT) a leader in the fresh/frozen pet food category, with growth supported by a long-term premiumization tailwind. In addition, favorable customer metrics were noted to outline the opportunity ahead for Freshpet (FRPT), and targets are seen as reasonable. However, the firm is cautious on the stock because capacity is tight, which could consume cash to limit the upside potential. Shares of Freshpet (FRPT) were said to be trading at the top-end of Jefferies’ high-growth/disruptors valuation basket, which means investors may want to wait for a better entry point.

“Higher costs, build-out/production delays, competition, or a myriad of things can happen. Shares trade at 28x ’25 EBITDA, the highest in our basket of high-growth consumer peers. For example, FRPT is priced higher than Celsius despite its lower growth profile and EBITDA margins. Valuation creates less favorable risk-reward.”

The Seeking Alpha Quant Rating on FRPT is also flashing Hold.

Shares of Freshpet (FRPT) gained 0.94% in Tuesday morning trading to $85.24 vs. the 52-week trading range of $45.13 to $86.48.