The Sell-Side Weighs In On Blue Apron

Blue Apron Holdings Inc (NYSE:APRN) shares jumped 13 percent on Monday after a number of its IPO underwriters weighed in on the stock for the first time following the expiration of the mandatory post-IPO quiet period.

Here’s a rundown of what Wall Street had to say about Blue Apron.

Barclays analyst Ross Sandler said that, with a $1 billion annual run rate and a $1 trillion addressable market, few companies have the potential of Blue Apron.

“Our optimism is somewhat tempered by the revenue deceleration and erosion in unit economics over the past couple of quarters, but out concerns have increased meaningfully since last week’s soft launch by Amazon in meal kits,” Sandler wrote.

Oppenheimer analyst Jeff Helfstein said Blue Apron is already the vertical operator in the subscription meal kit business and should be on the path to expanding gross margins.

“While the headwinds are clear—rising CPAs, potential competition from scaled players, and generic product offerings—we believe that new frequency and recipe options should reduce churn, although this effect will be partially offset by lower order value, on average,” Helfstein wrote.

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Goldman Sachs analyst Heath Terry said the company is facing the typical highly-competitive environment that comes along with building a new market.

“We see this hyper-competition as the primary source of Blue Apron's rising costs and slowing growth and an eventual key to both improving," Terry wrote.

RBC analyst Mark Mahaney said Blue Apron has the opportunity to expand its offerings in the future.

“The company’s new product and service initiatives enhance its consumer value proposition and will lead to re-accelerating growth in FY 18 and a multiple re-rating,” Mahaney wrote.

Stifel analyst Scott Devitt said Blue Apron’s stock currently trades at a valuation discount to its peers at just 1x 2018 projected revenue.

“The young company has built a sophisticated, technology-driven supply chain and logistics network which should support its leading position in the crowded meal kit company landscape,” Devitt wrote.

Raymond James analyst Aaron Kessler said he is cautious on the stock given the company’s high churn rate and slowing subscriber growth.

“While optimistic that more flexible plans will drive increased order frequency, we would like to see evidence this is working before we become more constructive on shares at current levels,” Kessler wrote.

Morgan Stanley analyst Brian Nowak said he doesn’t expect Blue Apron to turn a profit until 2020.

“Marketing leverage is key to profitability and we believe competition (we detail 9 meal kit competitors), customer acquisition cost, and the aforementioned churn drive the need to spend on marketing,” he wrote.

CNBC's Jim Cramer said Wall Street analysts seem to be overlooking a major problem for Blue Apron.

“All these analysts need to take into consideration that the world changed when Amazon bought Whole Foods,” Cramer said. He added that few companies have been able to demonstrate that their business model are Amazon-proof.

While the stock spiked higher on Monday, Wall Street remains mixed on Blue Apron stock looking ahead:

• Barclays has an Equal Weight rating and $7.00 target.
• William Blair has a Market Perform rating.
• Raymond James has a Market Perform rating.
• Oppenheimer has an Outperform rating and $11.00 target.
• SunTrust Robinson Humphrey Initiates has a Buy Rating and $12.00 target.
• Stifel has a Buy rating and $10.00 target.
• Goldman Sachs has a Buy rating and $11.00 target.
• RBC Capital has an Outperform Rating and $10.00 target.
• Barclays has an Equal-Weight rating and $7.00 target.
• Morgan Stanley has an Equal-Weight rating and $7.50 target.
• Canaccord Genuity has a Buy rating and $14.00 target.
• Needham has a Buy rating and $10 price target.