HelloFresh shares surge after Goldman Sachs analysts reiterate rating

By Scott Kanowsky

Investing.com -- Shares in HelloFresh SE (ETR:HFGG) jumped towards the top of the pan-European Stoxx 600 on Tuesday after analysts at Goldman Sachs backed their rating of the meal kit delivery service.

In a note to clients, the analysts reiterated their "Buy" rating of the stock, arguing that it retains an "attractive risk/reward dynamic" at its current levels. They said the firm's recurring customer base is "underappreciated," adding that this base pays full prices that help offset losses stemming from discounts offered to new users.

"In fact, while higher acquisition costs have driven up the cost of adding new customers, our analysis suggests that the profitability per existing customer has been improving [year-on-year] across 2022," the Goldman Sachs analysts said.

The investment bank's €44 price target for HelloFresh, which was first initiated in November, would also mark a possible 100% upside to its current mark of a little over €22. However, shares in the Berlin-based company still have a long way to go to recover from a sharp tumble last year that erased about two-thirds of its value.

Investor interest in the stock surged in mid-morning trading, with volumes more than tripling the 20-day average for the time of day.

HelloFresh's closest rivals, including Just Eat Takeaway (AS:TKWY) and Delivery Hero AG (ETR:DHER), rose as well. These stocks also slid steeply in 2022 as results were hit by a slowdown in a pandemic-induced spike in demand, soaring cost inflation, and supply chain disruptions.