Jefferies downgraded Freshpet Inc to Hold amid a sustained slowdown in demand for the company’s fresh pet food products.
This comes after Bank of America downgrade which highlighted weaker pet spending and slowing adoption trends.
Jefferies said Freshpet’s current growth of around 10% is unlikely to be sustained, with household penetration gains slowing to 8-9% from mid-teens levels earlier this year.
Existing customers are also spending less, while new cohorts are not maturing as quickly, putting further pressure on sales.
Jefferies said it had previously upgraded Freshpet in February based on a $1.8 billion sales target for 2027 and higher margin expectations, but it underestimated the pace of the slowdown and overestimated the company’s ability to reignite demand.
The 2027 sales targets have since been pulled, with tough comparisons expected until the second quarter of 2026.
On profitability, Jefferies noted most cost targets set in 2023 have been achieved, and additional leverage from marketing and overhead will be limited. It now estimates 2027 adjusted EBITDA of $264 million, below the Street’s $297 million consensus, with margins likely to come in at 20%, versus Street expectations of 21.4%.
Jefferies set a price target of $53, valuing Freshpet in line with high-growth peers at 11 times 2027 adjusted EBITDA, citing positive free cash flow and manufacturing assets as a floor for value.
The firm’s downgrade reflects broader pressures in the premium pet food category, where consumer trade-up rates have slowed even as overall pet industry spending remains resilient.
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