HelloFresh Shares Jump After Raising Outlook for Meal-Kit Orders

(Bloomberg) --

HelloFresh SE shares rose as much as 13.9% in early trading on Tuesday after boosting its full year outlook, but some analysts remain skeptical of the potential for out performance.

The meal-kit company said it expects its 2021 sales to grow between 57% to 62%, an improvement on earlier expectations of between 45% to 55%, according to a statement late Monday.

“We further expanded our total addressable market by successfully launching HelloFresh in Norway in July and in Italy in October,” Chief Executive Officer Dominik Richter said. “With all of these investments in place, we remain focused on reaching our mid-term revenue target of 10 billion euros.”

HelloFresh was among 10 new companies to recently join Germany’s biggest stock index. Third-quarter revenue hit 1.42 billion euros ($1.6 billion), versus an average estimate of 1.32 billion euros, after stronger sales over the summer compared to the same period in 2020 during the pandemic. 

HelloFresh’s outlook upgrade is impressive given the cost pressures and investments being made in growth and staff, said Jefferies analyst Sebastian Patulea.

Despite the full-year optimism, analysts are skeptical about HelloFresh’s outlook. Food delivery companies are spending heavily to win consumers in a highly competitive European food delivery market, with HelloFresh’s third-quarter subscriptions falling by around 740,000 to 6.94 million compared to the prior period. 

The margin improvement needed to meet current estimates “looks too ambitious,” Morgan Stanley analyst Miriam Adisa said in a research note. 

Bloomberg Intelligence analyst Diana Gomes added that HelloFresh’s earnings growth is likely to trail its sales performance in the medium-term, but diversifying into the higher-margin ready-to-eat category will help to increase profitable market share gains.

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