German meal-kit delivery company HelloFresh has not impressed Deutsche Bank analysts with its downwardly revised revenue and profit guidance.
It was “not the (fourth quarter) we were expecting”, said the bank’s analysts, who moved the Frankfurt-listed company’s shares down from a 'buy' to a 'hold' rating.
Sales in North America have lagged for HelloFresh, with cited issues being limited customer growth, operational challenges at its Arizona facility due to water and staff shortages, and extended maintenance at its Illinois site.
Deutsche Bank agreed that most of these issues “appear to be temporary”, while the final quarter will still be a growth quarter on a firm-wide level.
“However, we move to the sidelines until we see the ready-to-eat business factor start to more meaningfully contribute to the group top-line and we see the North American meal kit business return to steady growth,” the bank said.
Despite the flailing North America segment, analysts noted that the international market continues to perform well and in line with expectations with large markets such as the UK and Germany not showing signs of macro-related weakness.
But that is not enough to dissuade a substantial target share price reduction from €41 to €26.