Revitalized And Debt-Free Blue Apron: Analyst Forecasts Positive Cash Flow Under New Structure

Benchmark analyst Daniel L. Kurnos reiterated a Buy rating on the shares of Blue Apron Holdings Inc APRN and raised the price target from $5 to $16.

On Friday before the open, Blue Apron effected an on-time close of the previously announced FreshRealm transaction, sending shares up over 67% on the day.

The analyst had previously noted that despite the wording around a non-binding letter of intent, the deal was expected to be closed, as the transaction ought to be substantially beneficial to both parties involved.

The analyst noted that the company now had a renewed, debt-free story that is still burning cash but with the ability to move much more quickly towards free cash flow positive under the new operating structure, even in a tougher consumer environment.

Even with the FreshRealm deal officially completed, the analyst suspect there is still no shortage of skepticism from investors regarding the path to reversing the free cash burn.

The analyst believes the shift to asset-light could produce some incremental cost savings on the corporate side via redundancy elimination.

The analyst believes Apron still is not done with its own internal efficiency efforts even after the significant recent cost save actions even beyond the corporate savings.

Also, there is an element of cost reduction/economies of scale that Apron would benefit from as its former facilities get filled and utilized by FreshRealm, which in turn could also lead to adjacent revenue opportunities as different manufacturing and processing equipment gets brought in to cater to other companies, added the analyst.

Price Action: APRN shares are trading lower by 11% at $7.95 on the last check Monday.