Freshpet's Biggest Challenge May Be That No One's Heard Of It

With just 20 percent of dog owners indicating they know the company's brand, translating the brand awareness into market share or revenue remains challenging. Therefore, analyst Eric Gottlieb thinks Freshpet is still in its early life of growth.

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The brokerage pointed out that the company recorded 45 percent, 37 percent and 34 percent growth in the last three years. For the current fiscal year 2016, the company expects a minimum growth of 17.9 percent, suggesting the growth rate has slowed down over the years.

Similarly, sales per store growth fell from 14 percent, 11 percent, 19 percent in the last three-year period to just 5 percent for the year-to-date period.

Valuation And Rating

The brokerage initiated the stock with a Neutral rating and $10 as the price target on the company's shares.

The analyst elaborated, "While that multiple is elevated relative to other CPG companies, we believe Freshpet is still in high growth mode, which justifies our valuation. The stock, however, does not offer enough potential to warrant an investment at this time."

The analyst is ready re-analyzing his target price if there is any proof of increased store growth or SG&A leverage.

At last check, Freshpet was up 0.57 percent at $8.75.

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