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Why Freshpet Stock Was Sliding Today

By Jeremy Bowman – Dec 17, 2021 at 11:32AM

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Shares dipped after the fresh pet-food seller slashed its guidance.

What happened

Shares of Freshpet (FRPT 3.95%) were pulling back after the maker of fresh, refrigerated pet food slashed its full-year guidance over supply chain issues.

As a result, the stock closed down 3.2%.

An English beagle looking upward

Image source: Getty Images.

So what

In an update this morning, Freshpet said it now expected full-year revenue of $425 million to $430 million, down from a prior target of $445 million. It also guided to adjusted EBITDA to be $42 million, down from a previous forecast of $50 million.

In a statement, CEO Billy Cyr said: "Supply chain issues continue to cause new challenges for our business, this time with parts supplies for key packaging components. While we've since solved this issue, it nonetheless caused a tempoary decrease in production, which in turn is resulting in the revision to our full year expectations that we are updating today."

Cyr also added that the company's key metrics are improving as it moves into the new year, a positive sign for 2022.

Now what

Freshpet shares were down as much as 12% this morning but slowly recovered most of their losses as some investors seemed to believe the sell-off, which brought the stock down to a 52-week low, was a buying opportunity, especially as the supply chain challenges are short-term in nature. 

One analyst, Mark Astrachan of Stifel, lowered his price target on the stock but maintained a buy rating, saying that end-demand remains sound. 

Freshpet has been a big winner on the stock market over its history, delivering steady growth as the leader in fresh, refrigerated pet food, and its long-term growth prospects still look solid as it still has a lot of the market left to penetrate. Considering that, today's sell-off seems to offer a good buying opportunity for the pet stock .

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool owns and recommends Freshpet. The Motley Fool has a disclosure policy.

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