Vita Coco Expected To See Gross Margin Expansion In FY23 Amid Moderating Freight Costs, Forecasts Analyst

Stephens & Co analyst Jim Salera initiated coverage on The Vita Coco Co Inc COCO at Equal-Weight with a price target of $30

The analyst is bullish on COCO's leadership in the fast-growing coconut water category, with the wide range of use of coconut water making it easy to penetrate households. 

RelatedVita Coco Launches 'Coconut Milk' Barista MLK, Exclusively With Alfred Coffee

Salera also applauds COCO's asset-light and hard-to-replicate global supply chain, that well positions it to meet growing demand. 

The analyst sees moderating ocean freight costs, which significantly increased during the onset of the pandemic and expects a ~900 bps gross margin expansion in FY23. 

Salera estimates FY23 sales of $477.9 million (consensus: $478.1 million), adjusted EBITDA of $56.1 million (consensus: $56.2 million), and EPS of $0.65.

For FY24, the analyst expects sales of $532.0 million (consensus: $532.9 million), adjusted EBITDA of $73.1 million (consensus: $73.5 million), and EPS of $0.82.

Price Action: COCO shares are trading lower by 1.99% at $28.57 on the last check Friday.

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