12:54 PM EDT, 09/08/2025 (MT Newswires) -- Freshpet ( FRPT ) is expected to see further deceleration in top-line trends amid a lack of improvement in the broader dog food category and prospects of growing competitive pressures, UBS Securities said Monday.

The pet food company's weekly all commodity volume percentage has increased in the last few weeks, likely reflecting its entrance into about 125 of Walmart's ( WMT ) Sam's Club stores. However, weekly dollar takeaway trends haven't seen a "meaningful step higher," which may imply that underlying trends have slowed, UBS analysts, including Bryan Adams, said in a note to clients.

In tracked channels, the dog food category has been falling by low single digits for at least the last 12 months, with both household penetration and buy rate flat or dropping on an annual basis. "Improving category growth has proven to be a powerful catalyst, but at this point we struggle to see what will lead to meaningful improvement here despite easy comparisons," the analysts wrote.

Farmer's Dog and other brands focused on direct to consumers have so far been Freshpet's ( FRPT ) main competition within the fresh dog food category. However, General Mills' ( GIS ) competitive product is set to start its rollout with about 5,000 coolers scheduled by the end of November, according to the note.

"While there is still much to learn around the launch, we expect the incremental competitive pressure in (Freshpet's ( FRPT )) core channels to more than offset any lift to category growth," the analysts said.

UBS lowered its price target on the Freshpet ( FRPT ) stock to $48 from $65 while maintaining its sell rating.

The company's shares were up 0.6% in Monday afternoon trade. The stock has lost about 63% in value so far this year.

"We believe further deceleration in top-line trends will continue to weigh on the stock," UBS said. "Margin delivery for (Freshpet ( FRPT )) has certainly been quite strong, but we believe a sustained stabilization in top-line trends is necessary for shares to work."

Last month, Freshpet ( FRPT ) said it expected to deliver "outsized" growth ahead as its maintained its full-year core earnings outlook despite demand headwinds in the dog food category. For 2027, the company removed its $1.8 billion net sales target to adjust for the recent slower growth, it said at the time.

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