- Andrew Left's Citron Research issued a lengthy research report on Blue Apron Holdings Inc (NYSE:APRN) with a $40 price target.
- The price target implies a 443% upside to the January 19 closing price of $7.36.
- "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.
- Citron acknowledges that HelloFresh SE (OTC:HLFFF) has become the dominant brand in meal kits but says that is reflected in the stock having a greater than $10 billion valuation versus Blue Apron at $160 million.
- Yet, Blue Apron has superior unit economics 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.
- Citron sees one of two scenarios to play out for Blue Apron: The company executes on its turnaround with stock at least $30 or is acquired at a "significant premium" by HelloFresh or a strategic buyer looking to expand into the meal kit category.
- Citron believes the company most likely to acquire Blue Apron is Peloton Interactive Inc (NASDAQ:PTON).
- Price Action: APRN shares traded higher by 18% at $8.69 on the last check Thursday.
