What happened

Shares of Whole Earth Brands (NASDAQ:FREE) were moving higher today after the maker of natural sweeteners, licorice derivates, and other such products got a bullish analyst rating from Cantor Fitzgerald.

The news lifted the stock 10.5% as of 12:34 p.m. EST.

A selection of different kinds of sweeteners.

Image source: Getty Images.

So what

Cantor Fitzgerald analyst Pablo Zuanic initiated coverage on Whole Earth with an overweight rating and a price target of $23, more than double where the stock is today. Zuanic said he sees Whole Earth benefiting from similar customer trends that have driven growth stocks like Beyond Meat and Freshpet as consumers increasingly reach for clean-label products and natural alternatives to conventional sweeteners.

While Zuanic's endorsement clearly has investors excited about the stock, the company has some important differences from those fast-growing companies mentioned above. Whole Earth, whose best-known product is probably Equal, only grew revenue by 4.6% in its most recent quarter, representative of the slow-growth sector it operates in.

Whole Earth, which came public earlier this year through a special-purpose acquisition company (SPAC), seems focused on expanding its portfolio; the company in November acquired Swerve, a maker of keto-friendly, plant-based sweeteners and baking mixes.

Now what

While there is a clear trend in food to natural products, that hasn't necessarily made winners of natural food stocks; growth prospects have been limited by distribution, competition from supermarkets, and other challenges. Whole Earth has a limited history as a publicly traded company and a slow growth rate, and is unprofitable on a generally accepted accounting principles (GAAP) basis. Given that, the company still has a lot to prove regardless of this morning's buy rating.

 

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