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.

• 10 stocks we like better than Freshpet ›

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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Image source: Getty Images.

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.

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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.