Wall Street analysts had a brutal assessment of Blue Apron’s prospects

Blue Apron released its first quarterly earnings release as a public company on Thursday, and it wasn’t pretty.

Blue Apron CEO Matt Salzberg said the company’s new facility in Linden, New Jersey, would be delayed, affecting earnings in the second half of the year.

Blue Apron forecast a net loss of $US121 million to $US128 million in the second half. It previously estimated it would earn $US380 million $US400 million in revenue.

Wall Street analysts were brutal in their assessment of Blue Apron’s earnings release, lowering their price targets.

“Execution challenges have led management to lower future growth estimates,” RBC Capital Markets said in a note lowering its price target to $US8 from $US10. “We continue to believe in the large TAM and APRN’s leadership position, but growth re-acceleration will come later than we expected.”

Oppenheimer removed its price target altogether, downgrading Blue Apron stock to “perform” from “outperform.”

“We believe APRN is now focused on operating without raising new capital, resulting in materially lower marketing spending in 2018 and beyond, partially offset by increased efficiency, resulting in lower revenue/DCF value,” writes Oppenheimer.

“While the issues surrounding the transition to a larger automated fulfillment center in NJ were partially understood, APRN is also seeing On-Time-In-Full (OTIF) issues with its legacy West Coast facility, suggesting scaling challenges greater than anticipated.”

Blue Apron’s stock price is down almost 50% since its June 30 debut, and shares were trading just above $US5 at midday Friday in New York, just above Morgan Stanley’s price target of $US5.

The bank has maintained its rating of “equal-weight,” but analysts at Morgan Stanley still had harsh words.

“We believe order error rates have increased (because on-time and in-full rates have fallen), which we believe has led to higher quarterly customer churn,” writes the bank. “APRN is taking steps to manage through these challenges (slowly shifting volume to the new Linden facility, slowing the roll-out of the product expansion, etc) but in the near-term we see these challenges leading to declining sequential net customer growth in 2H:17 and 1H:18.

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