HelloFresh growth has 'gone stale' - BofA
HelloFresh (OTC:HLFFF) was reinstated with an Underperform rating and €23.90 price target at BofA on Thursday, implying a potential 13% downside in the stock.
Analysts told investors in a note that the company's growth has «gone stale» and its revenues could slow.
«Whilst its meal-kit business is a beneficiary of the broader shift to online grocery shopping, we worry growth is now somewhat limited (9% in 24E vs 27% in 22A),» the analysts wrote.
«We think AOV (average order value) growth could start to soften as food inflation subsides. Also, operating in 18 countries already, there are few markets left for expansion, possibly just five more, limiting active customer growth and so revenue growth,» they added. BofA believes the longer-term opportunity for HelloFresh to add customers is narrow.
Furthermore, the investment bank sees HFG's 2025 targets «seem punchy.» They are 11% and 26% below its revenue and EBITDA targets, respectively.
The analysts conclude the note by stating that «HFG seems expensive.»
