Freshpet, Inc. Post-Earnings Takeaways - Including from Management Follow Up

Research evidence excerpt

J P M O R G A N

North America Equity Research

05 August 2026

Freshpet, Inc.

Post-Earnings Takeaways - Including from

Management Follow Up

Overweight

FRPT, FRPT US

Price (04 Aug 26):$62.38

▲Price Target (Dec-27):$78.00

Prior (Dec-27):$72.00

The FRPT shares were up 13% at time of writing (SPX flat) following a 2Q26 sales

and EPS beat, annual guidance increases for both items, and a reiterated 20-22%

EBITDA margin outlook for 2027, with a 100 bps increase to the gross margin

outlook (initial take). We think some form of beat-and-raise quarter, with a gross

margin boost for next year, was broadly anticipated into the print. However, the

beat was bigger than expected, aided by strength in non-measured channels. And

the increased gross margin outlook for next year includes somewhat limited benefit

from the new line technology that has already been installed on three existing lines

and should ultimately boost GM by 100 bps on its own (before considering that

more lines could still be rolled out). We remain Overweight the shares.

Raising estimates and price target. 2Q26 results came in better than

expected. There are incremental logistics costs to consider going forward but

also more expected gross margin expansion. 2026E EBITDA goes to $215MM

from $213MM and 2027E to $268MM from $260MM. Our December 2027

price target goes to $78 from $72.

The 49% gross margin target is not the end goal. FRPT said that it sees 100

basis points of eventual gross margin benefit from the new line technology

being deployed on 3 lines, with ~25 basis points of expected benefit coming in

4Q26. But when discussing the 49% gross margin target for 2027, the company

was clear that the only assumed benefit was the ~25 bps to start off the year. The

rest would come from operating leverage. Multiple times on the earnings call,

FRPT stressed it views 49% as a “floor” and that the full 100 basis points of

benefit from the 3 new lines, plus any additional lines, would be incremental

to this.

In our follow-up call, we got some added color on the benefits of the new

line technology. The 100 basis point margin improvement from the first 3 lines

is greater than what additional lines would likely provide.…