Why Freshpet Was a Dog of a Stock This Week

Onetime investors' pet stock Freshpet (NASDAQ: FRPT) wasn't such a good boy over the past few days. On the back of a recommendation downgrade from one analyst and price target cuts from two others, investors sold out of the stock in recent trading sessions. That left it with a nearly 11% decline in price week-to-date as of Thursday evening, according to data compiled by S&P Global Market Intelligence.

Bye buy, says analyst

Of the three events, the most consequential was the downgrade. This occurred on Tuesday when Oppenheimer's Rupesh Parikh moved his Freshpet recommendation down one peg to perform (hold, in other words) from his former outperform (buy). In doing so, Parikh removed his $140 per share price target; it has not yet been replaced.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

According to reports, the analyst's new take on Freshpet is based on his observation that management has sounded more subdued about the company's prospects. He also characterized the company's latest guidance as "disappointing" and wrote that investors would be wise to wait for signs of top-line improvements.

This was compounded by those twin price target cuts, both of which were enacted at the beginning of the week.

Of the two, the more drastic was made by JPMorgan Chase prognosticator Ken Goldman, who now feels that Freshpet is fairly valued at $102 per share rather than his previous price target of $154. His peer Mark Astrachan of Stifel lowered his to $135 per share from $155. Both men kept their existing recommendations on the stock intact; these were neutral and buy, respectively.

A stock market treat?

I wouldn't necessarily bail from Freshpet, even though the stock has been in the investor doghouse since publishing its fourth-quarter and full-year results in February. I think its business strategy centered on healthy food products for our four-legged friends is a solid one, and the company is proving that it can grow its business robustly. This might be a good "buy on weakness" candidate.

JPMorgan Chase is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Freshpet and JPMorgan Chase. The Motley Fool has a disclosure policy.