Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 29 May, 25 | VITL | Buy | USD 31.78 | USD 33.5 | USD 35.8 | 19 days | Closed |
11.49%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Vital Farms, Inc., a food company, provides pasture-raised products in the United States. It offers shell eggs, butter, hard-boiled eggs, and liquid whole eggs. The company was founded in 2007 and is headquartered in Austin, Texas.
Butter product line sales grew 41% YoY, reflecting brand strength beyond eggs
Net revenue increased 9.6% YoY to $162.2 million
Operating cash flow decreased by 77.8%, from $23.9 million to $5.3 million.
Net income declined 11% YoY from $19.0 million to $16.9 million
Vital Farms faces operational and profitability risks from rising labor investments and near-term supply constraints, which may pressure margins despite strong demand and brand momentum
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 31.78 | 28.0 | 33.5 | 35.8 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Revenue Growth Driven by Product Demand and Pricing Strategy: In the first quarter ended March 30, 2025, Vital Farms reported a 9.6% increase in net revenue, reaching $162.2 million compared to $147.9 million in the same period in 2024. This growth was supported by price/mix benefits contributing $12.4 million and volume-related gains of $1.9 million, stemming from rising demand for existing offerings, product innovation, and expanded distribution with retail partners. This marks the company’s 20th consecutive quarter of year-over-year growth in both volume and net revenue since its 2020 IPO.
Margins Impacted by Strategic Crew Investments: Despite the growth in revenue, gross margin declined to 38.5%, compared to 39.8% in the prior-year quarter. Gross profit increased to $62.5 million from $58.9 million, benefiting from scale, favorable pricing, and lower commodity and diesel costs. However, the margin compression was attributed to elevated investments in workforce expansion to support planned growth, a deliberate decision aligned with long-term operational goals.
Earnings and Adjusted EBITDA Decline: Vital Farms reported a net income of $16.9 million, a drop from $19.0 million in Q1 2024, with earnings per diluted share decreasing to $0.37 from $0.43. The decline was primarily due to higher personnel-related expenditures. Similarly, Adjusted EBITDA fell to $27.5 million, representing 16.9% of net revenue, down from $29.1 million or 19.7% in the same quarter last year. Nonetheless, management emphasized that results were consistent with internal expectations.
Strong Balance Sheet Despite Lower Operating Cash Flow: The company maintained a robust liquidity position with $161.3 million in cash, cash equivalents, and marketable securities, and no outstanding debt. However, net cash from operating activities decreased significantly to $5.3 million, compared to $23.9 million in the prior-year quarter. Capital expenditures increased to $3.1 million, up from $1.3 million, reflecting initial investments in key infrastructure projects.
Supply Chain Expansion and Brand Momentum: Vital Farms continued executing on its supply chain expansion, increasing the number of contracted hens and expanding its family farm network to over 450 partners. Internal capacity is also on track to grow, with the construction of a new egg washing and packing line in Missouri expected to be completed in Q4 2025. Additionally, the butter segment delivered 41% year-over-year sales growth, bolstered by increasing brand recognition and consumer awareness.
Fiscal 2025 Outlook and Long-Term Vision: The company reaffirmed its 2025 guidance, projecting net revenue of at least $740 million (22% YoY growth) and Adjusted EBITDA of at least $100 million (15% YoY growth). Planned capital expenditures of $50–$60 million will support continued infrastructure investments, including facilities in Missouri and Indiana and a digital transformation project. Management remains confident in achieving the 2027 target of $1 billion in net revenue, emphasizing that current strategic investments are laying the foundation for sustained long-term growth.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Vital Farms Inc (NASDAQ: VITL) at the closing market price of USD 31.78, as on May 28, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Consumer Defensive Industry: Farm Products
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| VITL Vital Farms Inc |
-0.63 1.59% | 38.91 | 46.98 | 208.33 | 2.22 | 5.44 | 2.02 | 23.31 |
| ADM Archer-Daniels-Midland Company |
-0.59 1.06% | 55.31 | 14.60 | 10.52 | 0.28 | 1.12 | 0.40 | 8.49 |
| TSN Tyson Foods Inc |
-0.09 0.16% | 57.36 | - | 24.94 | 0.34 | 1.00 | 0.51 | 26.68 |
| BG Bunge Limited |
-2.95 3.62% | 78.44 | 10.84 | 10.76 | 0.22 | 1.16 | 0.29 | 5.96 |
| MNHVF Mowi ASA |
- -% | 18.35 | 19.37 | 9.03 | 1.64 | 2.33 | 2.08 | 8.19 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 28,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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