Guggenheim Analyst Explains The Bullish Case For Blue Apron

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Shares of
Blue Apron Holdings IncAPRN
gained more than 6 percent on Monday after analysts at Guggenheim initiated coverage of the stock with a Buy rating. The firm's
Matt DiFrisco
's bullish stance stems from the company's already dominant market share, which can sustain the company for years to come.

Blue Apron holds as of Monday a 20 percent market share of the food delivery and home cooking market, so the company's sales over the years will grow in tandem with the overall market, the analyst explained during CNBC's "Halftime Report" segment. In fact, even if Blue Apron were to lose some of its market share then it will still see growth over the years. One of the reasons why Blue Apron's stock is notably lower compared to its initial public offering price is due to a change in strategy, he explained. Specifically, the company is no longer looking to "rapidly expand" its customer base, rather, it is trying to "improve revenue per existing customer." "If consumer dollars migrate to something like a meal kit solution like Blue Apron, you will see not only retailers but consumer product companies and food companies get into the space," he concluded. Related Links: Blue Apron: Challenges Will Eventually Give Way To Opportunity Time To Order Some Blue Apron?

"I think they are doing the right thing now by restraining the marketing dollar to get to profitability faster," DiFrisco said (see his track record here).

Perhaps most important to the bullish case, Blue Apron is not operating in a "winner take all" category. On top of that, Blue Apron could end up being acquired since it operates in the consumer products segment, which also happens to be the most active M&A group.

As of last check, shares of Blue Apron were up 5.88 percent at $5.49.

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Posted In: Analyst ColorCNBCLong IdeasPrice TargetInitiationTop StoriesAnalyst RatingsMoversMediaTrading IdeasfoodGuggenheimMatt DiFriscomeal kits
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