What Happened?
Shares of avocado company Mission Produce (NASDAQ: AVO) jumped 3.6% in the morning session after analysts at Roth Capital raised their fiscal year 2025 earnings per share (EPS) forecast for the company.
The investment firm now anticipates Mission Produce will post earnings of $0.59 per share for the year, a notable increase from its previous forecast of $0.51. This revised estimate is significantly higher than the current consensus estimate of $0.34 per share, signaling strong confidence in the company's future profitability. Roth Capital maintained its "Buy" rating on the stock and a $17.00 price target. The optimistic outlook from the analyst firm appears to be driving positive investor sentiment.
After the initial pop the shares cooled down to $12.52, up 2.7% from previous close.
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What Is The Market Telling Us
Mission Produce’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 7% on the news that the company reported third-quarter results that beat profit expectations but provided a weak forecast for avocado prices.
While the company posted earnings per share of $0.26, doubling the consensus estimate of $0.13, the positive result was overshadowed by its forward-looking guidance. Mission Produce management stated they expect avocado pricing to be approximately 20% to 25% lower in the fourth quarter compared to the same period last year. The company attributed the anticipated price decline to higher avocado volumes being available in both U.S. and international markets, a trend confirmed by reports of increased supply from key producers in Mexico and Peru. This weaker pricing outlook is raising investor concerns about the company's future profitability, despite the strong quarterly earnings beat.
Mission Produce is down 11.7% since the beginning of the year, and at $12.52 per share, it is trading 13.4% below its 52-week high of $14.45 from December 2024. Investors who bought $1,000 worth of Mission Produce’s shares at the IPO in September 2020 would now be looking at an investment worth $907.25.
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