Investors lose their appetite with HelloFresh
The meal kit delivery company HelloFresh has cut its earnings forecast. This is due to problems in the US ready meals division following problems at a plant. Investors reacted with extreme displeasure - also because the MDAX company had only recently confirmed its forecast.
Due to problems in the ready meals business, the cooking box mail order company HelloFresh has lowered its profit forecast. Investors took flight as a result, causing the cooking box mail order company to suffer the biggest share price fall in its history. At times, the share fell by up to 23 percent to an eight-month low. Anyone who bought a HelloFresh share two years ago and has held on to it since then has now lost over 80 percent. At the time, however, the shares had also benefited greatly from the effects of the coronavirus pandemic.
According to the company, the US ready meals division, on which the MDAX group has high hopes, is struggling with weakening demand as well as rising costs and production problems. As a result, the adjusted consolidated operating result this year is expected to be between 430 million and 470 million euros instead of 470 million to 540 million euros. Turnover will probably only increase by two to five percent instead of two to eight percent.
The main reasons for this are sluggish acquisition of new customers and delays in the construction of a new production facility. There were temporary bottlenecks in water supply and personnel at the plant in Arizona and capacity bottlenecks at the existing production facility in Illinois because maintenance work took longer than expected.
Focus on "final support"
HelloFresh is losing a lot of investor confidence with this lowered forecast, warned one stockbroker. After all, the company had reaffirmed its targets when it published its financial figures around three weeks ago. Analyst Nizla Naizer from Deutsche Bank agrees with the company's assessment that the current burdens from the US ready meals business are temporary. Nevertheless, she downgraded HelloFresh shares to "Hold" and lowered the price target from 41 to 26 euros.
The DZ Bank analysts confirmed their "sell" rating. In view of the weak development in the US cooking box business, market participants are likely to become increasingly concerned about possible structural challenges in acquiring new customers and question the growth potential for the coming years, according to the analysts. The development of active customers in the US cooking box business has already been disappointing in recent quarters.
The HelloFresh share price had already halved in the past two months. According to market participants, HelloFresh shares are currently at their March low. "If they fall below this 'last support', that would be very negative," said one trader. On the other hand, the probability of stabilization is very high.
Despite the promising outlook for HelloFresh's US ready meals division, several challenges have emerged, leading to revised earnings forecasts for MDax companies. Consequently, the share prices of these companies have been adversely affected, with HelloFresh experiencing its largest share price drop in history.
Source: www.ntv.de
