Activist pressure boosts their prospects

Article Excerpt

These two pet-related firms recently settled with activist investors, which should help push up their stock prices. However, we see only one as a buy right now. FRESHPET INC. $129 is a hold. The company (Nasdaq symbol FRPT; Consumer sector; Shares outstanding: 48.4 million; Market cap: $6.2 billion; No dividend paid; Takeover Target Rating: Medium; www.freshpet.com) makes fresh, natural food for dogs and cats. In August 2023, Freshpet and activist investor Jana Partners announced a cooperation agreement. As a result, Freshpet appointed two new directors to its board. Jana’s pressure seems to be paying off. In the three months ended March 31, 2024, Freshpet’s revenues rose 33.6%, to $223.8 million from $167.5 million a year earlier. That increase was mainly due to a 30.6% jump in volumes. The company also earned $18.5 million, or $0.37 a share, in the quarter compared to the year-earlier loss of $24.8 million, or $0.52 a share. While Freshpet will continue to benefit from increased pet ownership in the wake of the pandemic,…