Greenridge Capital maintained a Buy rating and a $4.50 price target on Barfresh Food Group, Inc. (NASDAQ:OTC:BRFH), following the company's announcement that it has started sales of its new Pop & Go Freeze Pops. The product, a line of 100% fruit juice pops in five flavors, is designed to meet the requirements of the USDA's Reimbursable Meal Program and is initially aimed at school lunch menus.
The company's capacity to produce these freeze pops is significant, with the ability to manufacture up to 50 million units per year through its contract manufacturer. This production capability aligns with the management's optimism about the potential success of the Pop & Go line.
Barfresh's management is expected to provide more details on the sales outlook for the Pop & Go Freeze Pops during the upcoming third-quarter conference call. This call is anticipated to offer insights into the company’s sales performance across various products and channels, which will help in assessing the potential growth in the company's revenue and profitability for the following year.
The price target set by Greenridge Capital is based on an enterprise value to revenue (EV/Revenue) multiple of approximately 4 times the firm's forward twelve-month revenue estimate of $16.0 million for Barfresh Food Group. The analyst's reiteration of the price target and rating reflects confidence in the company's operational progress and future financial performance.
Barfresh Food Group's strategic move to launch a product that caters to the nutritional guidelines of the USDA's meal program for schools could contribute to the company's revenue stream in the current quarter, as indicated by the recent announcement. The market will be looking forward to the third-quarter conference call for a more detailed financial outlook.
In other recent news, Barfresh Food Group Inc. has made significant strides in its operations, as revealed in its Second Quarter 2024 Corporate Update Call. The company anticipates record quarterly revenue in Q3 and the highest annual revenue for the fiscal year 2024, backed by a positive adjusted EBITDA expected for Q3 and the latter half of the year. These recent developments are fueled by over $2.2 million in revenue and orders for Q3, marking a 40% year-over-year increase.
Despite a slight dip in Q2 revenue, Barfresh has strategically invested in product expansion, production capacity, and leadership. The launch of a new product, Pop & Go, targeting school lunch menus, and an expansion of its sales broker network to cover 95% of the country, are among the company's growth strategies. The company's financials show a net loss increase year-over-year, primarily due to stock-based compensation and recruiting costs.
Barfresh's management team is confident in the company's strategic investments and product offerings, and they are formulating strategies to target a broader market, including quick service restaurants and general food service channels. The company's cash burn is expected to normalize in the second half of the year following inventory build-up.
InvestingPro Insights
Barfresh Food Group's recent launch of Pop & Go Freeze Pops aligns with some key financial metrics and trends highlighted by InvestingPro. The company's revenue growth of 18.54% over the last twelve months as of Q2 2024 suggests a positive trajectory, supporting the optimism surrounding the new product line. This growth is particularly noteworthy given the company's ability to produce up to 50 million units of the new freeze pops annually.
InvestingPro Tips indicate that analysts anticipate sales growth in the current year, which could be further bolstered by the introduction of Pop & Go Freeze Pops. The product's alignment with USDA requirements for school lunch programs may contribute to this expected growth. Additionally, the company holds more cash than debt on its balance sheet, potentially providing financial flexibility to support the rollout and marketing of the new product line.
However, investors should note that Barfresh is not currently profitable, with a negative operating income margin of -30.95% in the last twelve months. This underscores the importance of the upcoming third-quarter conference call, where management is expected to provide more details on the sales outlook for Pop & Go Freeze Pops and other products.
For those seeking a more comprehensive analysis, InvestingPro offers 9 additional tips that could provide further insights into Barfresh Food Group's financial health and market position.
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