Market Overview

KeyBanc: Blue Apron Could Be A 'Compelling Acquisition Target'

KeyBanc: Blue Apron Could Be A 'Compelling Acquisition Target'

Blue Apron Holdings Inc (NYSE: APRN) is one of the duds among this year's IPOs. 

The stock has pulled back notably from its offer price of $10. Against this backdrop, there's been talk of whether the meal kit company's valuation is attractive enough to solicit M&A interest. 

The Analyst

KeyBanc Capital Markets analyst Edward Yruma initiated coverage of Blue Apron with a Sector Weight rating

The Thesis

Though near-term risk remains high, it's offset by Blue Apron's strong positioning in the secularly underpenetrated e-commerce category, analyst Yruma said in a Monday note. (See Yruma's track record here.) 

The analyst said his bias is positive, but he's settled for a Sector Weight rating, given an impending event: The movement of Blue Apron's New Jersey operations to a facility in Linden. 

With the size of the grocery market estimated at $800 billion and the restaurant market valued at $600 billion — sectors Blue Apron operates — KeyBanc estimates the market opportunity for the company at $2 billion-plus over the next five years.

Blue Apron is likely to either pair with a traditional retailer or become "a compelling acquisition target" in light of its "attractive" asset base, Yruma said.

With Blue Apron trading at 0.5 times enterprise value/sales, it's is one of the least expensive names in e-commerce, the analyst said. 

The valuation remains fair given volatility in the business, according to KeyBanc. A number of e-commerce startups such as Dollar Shave, Jet, Bonobos and, have been acquired by strategics for over two to three times sales, Yruma said. 

"We think that APRN could be very attractive to an e-commerce company, grocery store or food company." 

The Price Action

Blue Apron shares closed last Friday at $3.04, roughly 70 percent off its IPO pricing.

Related Links:

Funko Flops As IPO Market Cools Once Again

Food, Fashion, Finance Firms Among 10 To IPO

Photo courtesy of Blue Apron. 

Latest Ratings for APRN

Nov 2018BarclaysMaintainsEqual-WeightEqual-Weight
Nov 2018GuggenheimDowngradesBuyNeutral
Nov 2018Canaccord GenuityDowngradesBuyHold

View More Analyst Ratings for APRN
View the Latest Analyst Ratings

Posted-In: Blue Apron Edward Yruma KeyBanc Capital MarketsAnalyst Color Initiation Restaurants Analyst Ratings General Best of Benzinga


Related Articles (APRN)

View Comments and Join the Discussion!

Latest Ratings

ENVDA DavidsonDowngrades0.0
FDXJP MorganDowngrades202.0
DLTRTelsey Advisory GroupUpgrades117.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Trader Essentials
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Analyst Loves Acadia Realty's Strategy, But Not Its Valuation

Standpoint Research Raises Bitcoin Target To $14,000