Buy-backs to support share price – Up to BUY

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What's it all about ?

After the significant decline in share price since November, HelloFresh introduced a share buy-back program with a total volume of up to EUR 250m. This translates to approx. 2.4% of the company’s outstanding shares. We see this as a support after the massive price decline in the recent weeks. Earlier in December, the company issued a disappointing outlook projecting a massive margin drag by long-term investments. We remain sceptical about HelloFresh's margins: The pandemic has provided significant tailwinds for low-cost customer acquisition. Now the company has to prove that it can retain its customers, attract new ones, and grow the share of wallet. We believe that this will only work at higher costs. However, the current drop in share price is out of proportion (intraday XETRA: EUR 56.08). With unchanged estimates and PT of EUR 64.00, we now rate HelloFresh with BUY (from SELL).