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Blue Apron Holdings Inc (NYSE:APRN) shares are reeling after reporting a third-quarter earnings miss Tuesday.
The food delivery subscription service has lost nearly 88 percent of its value since its 2017 IPO.
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The Analyst
Canaccord Genuity analyst Michael Graham downgraded Blue Apron from Buy to Hold and lowered the price target from $6 to $3.
The Thesis
Blue Apron is transitioning in two major ways, Graham said in the downgrade note. (See his track record here.)
In the core direct-to-consumer business, the company is targeting more profitable and fewer customers in its acquisition efforts, the analyst said.
Blue Apron is also more aggressively pursuing a retail business with newer products and a wide range of distribution partnerships, Graham said.
The top 30 percent of Blue Apron's customers accounted for over 80 percent of revenues in the company's first year as a public company, leading it to shift its focus and promotional spending to deepen relationships in this tier, the analyst said. Blue Apron also announced a 4-percent reduction in headcount during the quarter, he said.
Partnerships will be a key focus moving forward, according to Cannacord, after Blue Apron recently announced integration with Walmart Inc (NYSE:WMT)'s Jet.com, Weight Watchers International, Inc (NASDAQ:WTW) and a pilot program with Costco Wholesale Corporation (NASDAQ:COST).
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Despite the potential for a turnaround, Graham remains cautious moving forward.
"Despite the several positives, given the guidance for continued revenue declines next year, we feel a Hold rating is more appropriate for now."
Elsewhere On The Street
Raymond James analyst Aaron Kessler maintained a Market Perform rating on Blue Apron.
KeyBanc Capital Markets analyst Edward Yruma maintained a Sector Weight rating.
The Price Action
Blue Apron shares were down 0.85 percent at $1.16 at the time of publication Thursday.
Related Links:
Is The Street Finding An Appetite For Blue Apron?
GabellI: Struggling Blue Apron Poised For $2.4B In Revenue
Photo courtesy of Blue Apron.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.