Freshpet's Third Quarter Jump Overshadows Legal Troubles and Updated Growth Alerts

Freshpet Inc (FRPT) posted its third-quarter 2025 financial results, surpassing analyst forecasts. Net sales climbed 14% to $288.8 million, fueled by a 12.9% increase in volume and a 1.1% benefit from price and mix, according to a

. The pet food company also generated positive free cash flow during the quarter, achieving this milestone ahead of its initial target of reaching free cash flow positivity by year-end 2025. updated its outlook for the full year 2025, now projecting net sales to grow by about 13%, with adjusted EBITDA expected between $190 million and $195 million. Capital expenditures are now anticipated to be around $140 million, reduced from the earlier forecast of $175 million, as detailed in .

For the third quarter of 2025, adjusted EBITDA reached $54.6 million, topping the consensus estimate of $54.3 million, according to a

. Net income soared to $101.7 million, largely due to a $77.9 million deferred tax benefit from the release of a valuation allowance, as stated in the Q3 release. CEO Billy Cyr credited the robust results to strategic shifts in marketing, distribution, and innovation to keep pace with changing consumer preferences, along with strict cost controls, as reported by Reuters.

The revised guidance signals a more cautious approach amid evolving market conditions. Freshpet stated that it still expects to maintain positive free cash flow for the year, but has lowered its sales growth outlook to the bottom end of its previous 13%-16% range, according to the Q3 release. Gross margin for the quarter stood at 39.5% (adjusted to 46.0%), while selling, general, and administrative expenses dropped to 30.9% of net sales, a year-over-year decrease of 480 basis points, the release noted.

Analyst opinions have been mixed. Wall Street’s average rating for Freshpet stock remains "buy," with 10 analysts recommending "strong buy" or "buy," six suggesting "hold," and one advising "sell" or "strong sell," according to Reuters. The median 12-month price target is $70.00, representing a 29.7% premium to the October 31 closing price of $49.21. Still, the stock has experienced volatility, falling 6.7% over the past month as broader concerns about pet adoption rates and competition in the fresh pet food market persist, according to a

.

Currently, Freshpet shares are trading at 29 times projected earnings for the next 12 months, down from a price-to-earnings ratio of 43 three months prior, Reuters reported. Despite the more conservative guidance, the company reiterated its optimism about future growth in the category, highlighting its leadership in the premium pet food space and its success in attracting new pet owners, according to the Q3 release.

The strong quarterly results were overshadowed by a securities class action investigation launched by the Rosen Law Firm, which alleges the company may have issued misleading statements, as reported by a

. The law firm is seeking damages for investors who bought Freshpet shares, citing a 6.36% decline in the stock price after Bank of America downgraded the company in October, Morningstar added.

Freshpet’s third-quarter results highlight its ability to compete in a challenging market, with management emphasizing ongoing efforts to improve operational efficiency and drive innovation. The company’s continued profitability and ability to adapt to broader economic trends will be key as it aims to strengthen its leadership position in the years ahead.