MW Higher costs, smaller dogs and more cat adoptions are all hitting Freshpet's sales, analysts say

By Bill Peters

Fresh pet food is 'priced at a premium to other feeding options,' and competition is getting tougher, BofA analysts say in downgrading Freshpet

BofA analysts on Wednesday downgraded shares of Freshpet on Wednesday.

Higher costs of living, slowing pet adoptions and a preference toward cats and smaller dogs have kept high-end pet-food maker Freshpet Inc. in the doghouse, BofA analysts said Wednesday.

Against that backdrop, the analysts downgraded Freshpet's stock (FRPT) to a neutral rating from a buy rating, and cut their price target to $60 from $81. Shares finished 6.3% lower on Wednesday.

Freshpet does make some cat food, although its primary focus is on dogs. The BofA analysts said that growth in pet food - and dog food in particular - had weakened over the past six months, as shoppers tighten up their spending and pet adoptions overall continue to cool down from a boom during the pandemic. The result, they said, is less demand for fresh pet food.

"Pet adoption trends favor cats over dogs," the analysts added. "Simultaneously, small/medium-sized dogs are getting adopted at a higher rate than larger dogs, both volume headwinds."

"Fresh pet food is also priced at a premium to other feeding options," they added. "New entrants emerging within Fresh (General Mills $(GIS)$, Chewy (CHWY)) also opens the door to potential share loss."

Still, they said those new rivals underscore the legitimacy of fresh pet food as a business. However, rising standards of pet care, private-equity ownership, and higher costs for medications and equipment have made pet care more expensive.

Freshpet's second-quarter sales, reported in August, still grew 12.5%. But that was a slowdown from prior quarters, and management trimmed its full-year sales outlook to "match the environment we are facing today."

Chief Executive Billy Cyr said during the company's earnings call in August that customers were reluctant to spend more on higher-priced or higher-quality dog food, and were holding off on vet visits, medical care and getting a new dog. The decline of remote work and higher housing costs, he said, hadn't helped.

Those effects, he said, had hit dog owners harder than those with cats, which, he argued, were "typically lower maintenance and lower cost, making them a relatively attractive pet to have in times like these."

Cyr said he'd like to have a bigger cat-food business. But he said building out that business would take time.

"Cats have a very different way of eating than dogs do," he said. "Dogs have big jaws. They like to chew. Cats tend to eat with their tongue. They lap food. And so . . . there are very different requirements for the product on a cat food."

"And you also have to have fridges in the right places, you have the right messaging," he added. "We're working on it. We have an interest in that area, but it's not something that's going to happen this year."

-Bill Peters

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October 08, 2025 17:23 ET (21:23 GMT)

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