Analysts See Hope For Embattled Blue Apron After Q3 Sales Miss

Blue Apron Holdings Inc APRN shares are nearing 52-week lows after the meal kit service reported a third-quarter sales miss last week. 

The subscription service is undergoing a restructuring and has announced a 4-percent headcount reduction and a focus on specific areas of opportunity like strategic partnerships and high-value customers.

Raymond James Stays Neutral 

Raymond James analyst Aaron Kessler maintained a Market Perform rating on Blue Apron after the Q2 print. 

Customer growth remains a challenge for the company in the near-term, and churn likely remains elevated as well, the analyst said. 

“Going forward in 2019, Blue Apron will focus on higher quality customers, as Blue Apron noted the top 30 percent of customers have 10x the average revenue/customers vs. other customers." 

Blue Apron is targeting EBITDA profitability in 2019 through expense reductions and lower marketing spend. While Kessler said he is encouraged by the improved profit outlook, the analysts wants to see signs of a return to growth before becoming more constructive on the stock.

KeyBanc Sees Progress 

KeyBanc Capital Markets analyst Edward Yruma maintained a Sector Weight rating on Blue Apron.

The company is making progress in achieving a sustainable financial model, and focusing on the best customers is never a bad idea, the analyst said. 

“We think the decision to take a more strategic approach to marketing is essential to improving the financial model, and so success here should drive better results." 

Blue Apron has entered into a number of attractive relationships, and the Weight Watchers International, Inc. WTW) partnership is particularly attractive as a customer acquisition vehicle given the logical overlap between the two, Yruma said. 

“While we remain Sector Weight on the stock given the risk profile and likely binary outcome, we are increasingly convinced that APRN can pivot to a smaller but more profitable company." 

The Price Action

Blue Apron shares were down 2.56 percent at $1.14 at the close Monday. 

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Photo courtesy of Blue Apron.