Top Analyst Initiates Outperform on Blue Apron Holdings Inc (APRN); Sees 35% Upside for the Stock


Just one day after Blue Apron Holdings Inc (NYSE:APRN) shares spiked by 13% hitting $7.41, top analyst Mark Mahaney at RBC Capital is feeling confident that this leading player in the emerging meal-kit delivery market will continue its upward climb.

While acknowledging the prevailing skepticism on the market, Mahaney notes that “recent material growth deceleration & rising competitive risks are the biggest investor concerns.” However, there are a number of factors, which will allow the company to re-accelerate growth and address a potential multi-billion dollar market. The analyst points to the company’s core subscription model, more delivery, and recipe options along with a price range of $9-$10, which will give APRN a strong base in the $1.3 trillion Grocery and Restaurant US industry.

As such, Mahaney initiates coverage on APRN with an Outperform rating and a price target of $10, which indicates a near 35% upside from current levels. (To follow Mahaney’s track record, click here.) 

The analyst refutes APRN critics by highlighting, “The key short-term action question is can APRN’s product, logistics, and marketing investments lead to reaccelerating topline growth in FY18.” Mahaney goes on that “Our Outperform rating is based on our belief […] the bar is low and we see the potential for a material re-rating IF the company successfully executes.” Leaving any doubt to the side, the analyst trusts that “APRN can re-accelerate growth to 30% in FY18” and restore “Triple-digit growth in FY15-16.” This, in turn, would lead to “higher-than anticipated revenue growth for the next two years,” contends Mahaney.

Ultimately Mahaney believes, “the company’s new product and service initiatives enhance its consumer value proposition and will lead to re-accelerating growth in FY18 and a multiple re-rating, which warrants our Outperform rating and $10 price target.”

Additionally, analyst Youssef Squali of Sun Trust rates Blue Apron a Buy with a $12 price target; Jason Helfstein of Oppenheimer rates an Outperform with a $11 price target; while Heath Terry of Goldman Sachs rates a Buy on the stock with an $11 price target.Chart