Key insights
- TD Cowen maintained a Hold rating on Freshpet (FRPT) with a $90 price target. Costco's introduction of a cheaper, private-label fresh pet food poses a competitive threat. However, Freshpet's growth at Costco is accelerating due to enhanced merchandising (larger refrigerators). New bag manufacturing technology is also being deployed. Overall, the competitive pressure from Costco slightly outweighs the positive growth factors, leading to a mildly negative outlook for Freshpet.
Investing.com - TD Cowen reiterated a Hold rating and $90.00 price target on Freshpet (NASDAQ:FRPT) following a sell-side meeting where management addressed competitive threats and manufacturing advancements.
Costco recently introduced a Kirkland-branded fresh pet food product, a 6-pound bag of chicken-based pellets priced 14% cheaper per pound than Freshpet’s offerings. The private label product appeared on shelves days ago and resembles Freshpet’s format. The move by Costco, a prominent player in the Consumer Staples Distribution & Retail industry with a market cap of $442 billion and annual revenue of $286 billion, represents a significant competitive challenge. According to InvestingPro, which offers 14 additional exclusive tips on Costco, the retailer maintains strong financial health with an overall score rated as "GREAT."
TD Cowen expects enhanced merchandising at Costco to offset the competitive threat from the Kirkland product. Freshpet’s growth rate at Costco has accelerated to over 50% from 20% since the retailer installed larger 8-foot refrigerators in half its stores, according to management.
The firm projects that Costco’s expansion of refrigerators to its remaining 600 stores will add 150 basis points to Freshpet’s total growth rate, assuming the retailer accounted for approximately 6% of company sales last year.
Freshpet is deploying new bag manufacturing technology with a full version shipping product as of the first quarter of 2026 and a lite version expected to be complete in April. Management plans to decide by mid-year on further deployment of the technology this year.
In other recent news, Costco Wholesale reported strong earnings and revenue results, capturing the attention of several analyst firms. The company posted an adjusted earnings per share of $4.58, marking a 14% year-over-year increase and surpassing consensus expectations. Comparable sales rose 6.7% during the quarter, with U.S. sales growth at 6.4%, excluding fuel and foreign exchange impacts. Raymond James responded by raising its price target on Costco shares to $1,100, maintaining an Outperform rating. Similarly, BMO Capital increased its price target to $1,315, citing robust earnings amidst a volatile retail landscape. TD Cowen reiterated a Buy rating with a $1,175 price target, highlighting AI-driven growth as a positive factor. Truist Securities also raised its price target to $977, maintaining a Hold rating, noting the company’s strong quarter. Additionally, DA Davidson reiterated a Neutral rating with a $1,000 price target, emphasizing Costco’s strong membership performance. These developments reflect a positive response from analysts to Costco’s recent financial performance.
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