Andrew Left’s Citron Research issued a long research report on Blue Apron (APRN) with a $40 price target. The stock is up 11% to $8.18 following the report. “There are hundreds of meal kit reviews online and Blue Apron is always at the top of the list on food quality, price, and ease of use,” Citron said. The firm acknowledges that HelloFresh (HLFFF) has become the dominant brand in meal kits but says that is reflected in the stock having a greater than $10B valuation versus Blue Apron at $160M. Yet, Blue Apron has superior unit economics when compared to HelloFresh with 50% higher contribution margins, Citron argues. On an enterprise value per customer basis, Blue Apron trades at $457 versus HelloFresh at $1,499, it added. Citron believes that at Blue Apron’s current valuation, it has “zero fundamental downside” and could be liquidated “for a minimum” of $27 a share. The firm expects one of two scenarios to play out for Blue Apron: The company executes on its turnaround and the stock trades to at least $30, or it gets acquired at a “significant premium” by HelloFresh or a strategic buyer.
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