HelloFresh Cut to Sell at mwb Research After Failed Back-to-School Push

mwb research downgraded HelloFresh (ETR:HFG) to Sell from Hold and cut its price target to 1.80 euros from 2.90 euros in a recent note, following the company’s latest update.

“HelloFresh’s back-to-school period failed to deliver the new-customer volumes needed to support its prior outlook, prompting another sharp reset,” wrote mwb analyst Alexander Zienkowicz.

Last week, the German meal-kit company issued a profit warning after its back-to-school period failed to bring in enough new customers.

It now expects third-quarter revenue to fall 11% to 12% at constant currencies, well below the consensus of a 6.8% decline. Third-quarter adjusted EBITDA is guided at 45 million to 55 million euros, against consensus of 57.2 million euros.

Management blamed the weaker customer acquisition mainly on a sharper cut to marketing spending than in the first half.

HelloFresh also lowered its full-year revenue guidance to a decline of 9% to 11% at constant currencies. It had previously expected a drop at the lower end of a 3% to 6% range. Full-year adjusted EBITDA guidance fell to 350 million to 370 million euros from 375 million to 425 million euros.

Zienkowicz said the warning exposes a structural trade-off. Protecting the return on marketing spending means continuing to lose volume, while spending more to stabilize customer acquisition would dilute the benefits of the company’s efficiency program.

“The issue is therefore no longer merely when growth returns, but at what cost,” he wrote.

Zienkowicz said the broker no longer assumes a return to organic growth in its base case. It now models a gradually declining revenue base, with sales falling an average of 1.4% a year from 2026 through 2033 and no terminal growth. Its revised discounted cash flow valuation, using an 11.4% terminal cost of capital, gives 1.83 euros a share.