Why Freshpet Stock Was a Real Dog of a Stock Today

Key Points

• An analyst reduced his price target on the stock.

• He didn't change his recommendation, however, which remains hold.

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Freshpet (NASDAQ: FRPT) stock was hardly looking fresh as the new trading week began. The pet food and treat specialist saw its share price erode by more than 10%, on the back of an analyst's latest price target action. That decrease was far more pronounced than the 0.4% slide of the benchmark S&P 500 index that day.

Sales growth slowdown?

TD Cowen's Robert Moskow was the pundit accusing Freshpet of being a bad boy. He reduced his price target on the stock to $63 per share from his previous $72, maintaining his hold recommendation in the process.

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According to reports, Moskow wrote in his latest Freshpet note that the brand appears to be growing at a slower clip than in previous years. Due to this, he has reduced his estimate for fourth-quarter, year-over-year sales growth to 10%, which sits below the 13% consensus analysis.

This affects the annual growth estimate for the metric. The analyst now believes this will land toward the lower end of management's guidance of 13% to 16%.

A fresh competitor

In his Freshpet update, Moskow also signaled that another revision may be in order, depending on the actions of a big company rival. In mid-June, General Mills announced it would launch new marketing initiatives for its popular Blue Buffalo pet food and treat line. It added that it would also launch a high-end pet food brand, Edgard & Cooper, the following month.

The pundit wrote that a reevaluation of Freshpet would be necessary if General Mills' efforts result in significant poaching of the company's customers.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Freshpet. The Motley Fool has a disclosure policy.