MW Vital Farms' stock had its worst-ever month, but analysts say it's still a buy

By Ciara Linnane

All eight analysts who cover the stock on FactSet have a buy rating. It's all about the eggs.

Vital Farms Inc.'s stock fell another 6% Thursday after suffering its worst one-month performance on record, but one team of analysts argues the selling triggered by an accounting issue is more than overdone.

The Austin, Texas-based company $(VITL)$, a Certified B Corporation that sells ethically produced foods and is the leading U.S. brand of pasture-raised eggs by retail dollar sales, has seen its stock slump since it disclosed "control deficiencies" in its accounting last month.

The disclosure came as the company reported fourth-quarter earnings that exceeded expectations and offered revenue guidance that was ahead of FactSet consensus estimates.

Analysts weighing in on the numbers were upbeat and played down the accounting issue.

D.A. Davidson echoed that sentiment in note to clients Thursday, saying it expects the accounting issue identified by the company's auditor to be addressed in the next quarter or so, and without the need for restatements.

"Against an increasingly challenging consumer backdrop, we believe Vital has relatively high visibility among Growth peers," analysts Brian Holland and Brett Thompson wrote.

The pair visited one of Vital Farms' family farms on Wednesday and viewed the cold-storage facility at the company's Egg Central Station in Springfield, Mo. That facility, which features a new washing and packing line, became operational in the fourth quarter.

Vital Farms added 125 family farms to its roster in 2024, boosting the total to 425. The company said it takes about nine months for new farms to start egg production, meaning its guidance is weighted toward the back half of the year.

Eggs have become something of a hot-button issue after shortages triggered by a severe avian flu outbreak sent prices skyrocketing.

The average price of a dozen large eggs rose to an all-time high of $5.90 in February, up from around $2.50 a year earlier, according to U.S. consumer-price index data released Wednesday. The price rose just over 10% in February, following an increase of 15% in January.

Adding to the bird flu pressure are the Trump administration's tariff policies, which are expected to raise the costs of chicken feed and equipment, as MarketWatch's Myra P. Saefong reported.

The D.A. Davidson analysts said they are confident Vital Farms can meet its upbeat guidance, citing positives including a smooth onboarding for the new family farms and the strong value proposition for those farmers, which is aiding retention against competitive threats.

The new egg-processing facility is executing well, too, the analysts wrote.

They reiterated their buy rating on Vital Farms' stock. All eight analysts offering coverage on FactSet have a buy rating on the stock.

The stock has fallen 15% over the last month and is down 20% in the year to date, underperforming the S&P 500 SPX, which is down 5%.

-Ciara Linnane

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March 13, 2025 12:41 ET (16:41 GMT)

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