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Freshpet (FRPT) is a Zacks Rank #5 (Strong Sell) that is a pet food company that specializes in making fresh, refrigerated pet food for dogs and cats. Freshpet's products are made with real meat, vegetables, and other whole ingredients, and they are kept refrigerated to preserve freshness without the use of preservatives.
The stock has taken a big hit since making all-time highs earlier this year. A combination of bad regulation news and a miss on EPS has the stock over 50% lower over the last three months.
Unfortunately, the current situation does not look like a buy the dip opportunity. Investors interested in this name should remain patient.
About the Company
Freshpet was founded in 20024 and employs 1,300.
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.
FRPT is valued at $3.5 billion and has a Forward PE of 57. The stock holds Zacks Style Scores of “A” in Growth, but “F” in both Momentum and Value.
FDA News
The selling trend in Freshpet’s stock began shortly after the U.S. FDA’s January 17, 2025 announcement requiring pet food manufacturers covered by the PCAF rule to reanalyze their food safety plans to address Highly Pathogenic Avian Influenza (H5N1) as a foreseeable hazard.
This regulation specifically impacts companies using uncooked or unpasteurized animal products—like Freshpet, which prides itself on minimally processed, fresh ingredients such as raw poultry and other refrigerated meats.
Investors likely interpreted this as a material risk, since complying with the new rule could lead to increased production costs, additional regulatory burdens, and potential supply chain disruptions.
These concerns may have undermined confidence in Freshpet’s growth strategy and profitability outlook, triggering a wave of selling in the stock.
Q4 Earnings
Freshpet's stock continued to move lower following its Q4 earnings report in late February. Despite showing solid year-over-year improvements, the company failed to meet investor expectations and raised concerns about near-term execution.
The company reported adjusted earnings of $0.36 per share, missing the $0.44 consensus estimate, and revenue of $262.7 million, just shy of the expected $263 million.
While Freshpet posted strong margin expansion, its initial FY25 revenue guidance of $1.18–1.21 billion came in slightly below the $1.21 billion estimate.
Additionally, its projected capital expenditures of around $250 million for FY25 raised concerns about cash burn and the pace of investment.