Shares of Blue Apron (APRN) are surging on Monday after a slew of bullish commentary from Wall Street analysts.
Shares of the meal-kit delivery company were up as much as 15% on Monday to trade above $7.50 for the first time since July 13.
Even with this pop, Blue Apron shares are down about 25% from its IPO debut price, indicating investors have not reached the same conclusions about the company being argued by analysts.
Monday’s rally came as Wall Street’s post-IPO blackout period ended, allowing firms involved in the initial offering of the company’s shares to initiate research coverage on the stock 25 days after the IPO.
Of the 11 firms that published new recommendations on Blue Apron, Business Insider noted that seven were either “buy” or “outperform” — in effect the most positive view a firm can have on a stock — while the remaining four were neutral.
What analysts are saying about Blue Apron
Unlike the market’s early verdict on Blue Apron, none of its Wall Street investment banking partners have an outright negative view on the company.
Analysts at RBC Capital Markets, which was an underwriter on the deal, put a $10 price target and “Outperform” rating on shares on Monday.
“Blue Apron is the leading player in the nascent meal-kit delivery market and addressing a large, multi-billion dollar market,” the firm wrote Monday. “We believe the company’s new product and service initiatives enhance its consumer value proposition and will lead to re-accelerating growth in [fiscal year 2018] and a multiple re-rating.”
(A “multiple re-rating basically” is a jargon-y way of saying that a company will be more highly valued by investors even if its underlying business does not fundamentally transform.)
Analysts at Oppenheimer, which also served as an underwriter on Blue Apron’s IPO, put an $11 price target and also pegged an “Outperform” rating on shares on Monday.
Like RBC, Oppenheimer cited Blue Apron’s large TAM, or total addressable market, as a reason for optimism on the company’s future prospects.
Oppenheimer, which calculates Blue Apron’s TAM at $524 billion, said this market “should buoy the growth of the meal kit industry, which should drive Blue Apron’s revenue growth over time.” RBC notes that the grocery market in the U.S. is about $780 billion with just 2% of this spending, or $20 billion, happening online. The firm sees growth in online grocery spending as a positive boost to Blue Apron over time.
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Recent history, however, does not portend that Monday’s flurry of positive headlines for Blue Apron will be anything like a saving grace for the stock, which has been under pressure for all of its short time as a public company.