Wasatch Global Investors, an asset management company, released its "Small Cap Growth Strategy" Q4 2025 investor letter. A copy of the letter can be downloaded here. The Wasatch Small Cap Growth Strategy experienced a challenging fourth quarter as small-cap equities lagged broader market indices, reflecting investor caution and a continued preference for larger, more liquid stocks. During the period, the Russell 2000® Growth Index gained 1.22%, while the strategy finished the quarter in negative territory, ...

Core Insights - Vital Farms, a Certified B Corporation, will report its financial results for Q4 and the fiscal year ending December 28, 2025, on February 26, 2026, before market open [1] - A conference call and webcast will be held at 8:30 a.m. ET on the same day to discuss the results [1] Company Information - Vital Farms offers a range of ethically produced foods nationwide [1] - The company is listed on Nasdaq under the ticker symbol VITL [1]

Core Viewpoint - Vital Farms (VITL) is experiencing a decline in stock price and is under scrutiny for its upcoming earnings report, which is expected to show significant growth in earnings per share (EPS) and revenue compared to the previous year [1][2]. Financial Performance - The company is forecasted to report an EPS of $0.38, reflecting a 65.22% increase from the same quarter last year [2]. - Revenue is anticipated to reach $213.26 million, indicating a 28.48% growth compared to the corresponding quarter of the prior year [2]. - For the full year, analysts expect earnings of $1.44 per share and revenue of $759.16 million, representing a 22.03% increase in earnings but no change in revenue from last year [3]. Analyst Estimates - Recent modifications to analyst estimates for Vital Farms suggest a favorable outlook on the company's business health and profitability [4]. - The Zacks Consensus EPS estimate has decreased by 0.95% over the past month, and the company currently holds a Zacks Rank of 3 (Hold) [6]. Valuation Metrics - Vital Farms is trading at a Forward P/E ratio of 18.36, which is a premium compared to its industry's Forward P/E of 12.9 [7]. - The Food - Miscellaneous industry, part of the Consumer Staples sector, has a Zacks Industry Rank of 178, placing it in the bottom 28% of over 250 industries [7][8].

Financial Data and Key Metrics Changes - From 2018 through 2024, the company achieved a compound annual growth rate (CAGR) of 34% in net revenue and 50% in adjusted EBITDA [2] - For the year 2025 to date, revenues increased by 24% and EBITDA by 25% [2] - The company revised its fiscal 2025 net revenue guidance to a range of $755-$765 million due to temporary shipment disruptions [38] Business Line Data and Key Metrics Changes - Vital Farms is primarily known for its pasture-raised eggs and also offers pasture-raised butter, which is a smaller segment of its business [6] - The company has grown to become the second largest egg brand in the U.S., with a leading share in the fast-growing pasture-raised segment [2][8] - The gross margin for the company is notably higher than the historical average for eggs, reflecting the strength of its brand [9] Market Data and Key Metrics Changes - The company operates with over 575 small family farms across the "Pasture Belt," which supports its supply chain [8] - Despite challenges in the broader egg market due to avian influenza, Vital Farms maintained a strong commitment to biosecurity and was not affected by the disease [11] Company Strategy and Development Direction - The company aims to improve the lives of people, animals, and the planet through food, focusing on transparency and trust in its brand [6][17] - Vital Farms plans to expand its family farm network and has successfully added about 150 farms in 2025 [30] - A new facility in Indiana is scheduled to begin operations in 2027, which will integrate cold storage to improve efficiency [34][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's growth potential, citing strong brand awareness and consumer interest in ethically produced food [51] - The company anticipates that household penetration will increase as brand awareness grows, with a target of reaching $2 billion in net revenue by 2030 [51][52] - Management noted that the company has about 3% of the retail egg supply, indicating significant room for growth [53] Other Important Information - The company has implemented a new ERP system, which caused temporary disruptions but is now operating normally [38] - The third production line at the egg washing and packing facility in Springfield, Missouri, has been successfully opened and is contributing to increased capacity [30] Q&A Session Summary Question: Can you explain the impact of the ERP implementation on revenue guidance? - The ERP implementation caused temporary slowdowns in operations, leading to a loss of shelf space and ultimately a revision of revenue guidance for 2025 [38] Question: How is consumer demand trending? - Consumption is trending positively, with record high volume levels for shell eggs, indicating no demand problem [41] Question: What are the growth drivers for 2026? - The company expects growth to be driven more by velocity rather than distribution, with plans to capture lost purchase opportunities from previous disruptions [44]

Financial Data and Key Metrics Changes - From 2018 through 2024, the company achieved a compound annual growth rate (CAGR) of 34% in net revenue and 50% in Adjusted EBITDA [2] - For the year 2025 to date, revenues increased by 24% and EBITDA by 25% [2] Business Line Data and Key Metrics Changes - Vital Farms is primarily known for pasture-raised eggs and also offers pasture-raised butter, which is a smaller segment of the business [6] - The company has grown to become the second largest egg brand in the U.S., with a leading share in the fast-growing pasture-raised segment [2][6] Market Data and Key Metrics Changes - Vital Farms operates with over 575 small family farms across the "Pasture Belt," which supports year-round outdoor access for the birds [8] - The company has a strong presence in top retailers, being the number one or two egg brand in major stores like Whole Foods and Kroger [8] Company Strategy and Development Direction - The company focuses on improving animal welfare and transparency, which has contributed to its brand strength and gross margins [9] - Vital Farms plans to expand its family farm network and has successfully added about 150 farms in 2025 [30][31] - A new facility in Indiana is scheduled to begin operations in 2027, which will integrate cold storage to improve efficiency [34][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the brand's strength and the opportunity to demonstrate this in 2026 without the impact of avian influenza [12] - The company anticipates continued growth driven by brand awareness and household penetration, with a target of $2 billion in net revenue by 2030 [51][52] Other Important Information - The company successfully implemented a new ERP system, which initially slowed operations but is now functioning normally [38] - The company has a strong balance sheet, which enhances its attractiveness to farmers and lenders [22][23] Q&A Session Summary Question: Can you explain the impact of the ERP implementation on revenue guidance? - The ERP implementation caused temporary shipment disruptions, leading to a revised revenue guidance of $755-$765 million for the year [38] Question: How is consumer demand trending? - Consumption is trending positively, with record high volume levels for shell eggs leading into year-end, indicating no demand problem [41] Question: What are the growth drivers for 2026? - The company expects growth to be driven more by velocity rather than distribution, with plans to capture purchase opportunities lost during previous supply constraints [44]

Financial Data and Key Metrics Changes - From 2018 through 2024, the company achieved a compound annual growth rate (CAGR) of 34% in net revenue and 50% in adjusted EBITDA [2] - For the year 2025, year-to-date revenues increased by 24% and EBITDA by 25% [2] Business Line Data and Key Metrics Changes - Vital Farms is primarily known for its pasture-raised eggs and also offers pasture-raised butter, which is a smaller segment of its business [6] - The company has grown to become the second largest egg brand in the U.S., with a leading share in the fast-growing pasture-raised segment [2][6] Market Data and Key Metrics Changes - Vital Farms operates with over 575 small family farms across the "Pasture Belt," which supports year-round outdoor access for the birds [8] - The company has a gross margin that starts with a three, indicating strong brand strength compared to traditional egg producers [9] Company Strategy and Development Direction - The company focuses on improving the lives of people, animals, and the planet through ethical food production [6] - Vital Farms aims to expand its supply by adding new farmers to its network, with plans to add about 150 farms in 2025 [30][20] - The company is also planning a second facility in Indiana, scheduled to begin operations in 2027, which will integrate cold storage to improve efficiency [34][32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the absence of avian influenza affecting their farms, which allows them to demonstrate the strength of their brand [12] - The company anticipates continued growth driven by increased brand awareness and household penetration, with a target of $2 billion in net revenue by 2030 [52][54] Other Important Information - The company successfully opened a third production line at its egg washing and packing facility in Springfield, Missouri, which is expected to enhance production capacity [28][30] - The implementation of a new ERP system caused temporary shipment disruptions, leading to a revised revenue guidance for 2025 [36][37] Q&A Session Summary Question: How did the ERP implementation affect revenue guidance? - The ERP implementation led to slower operations at the egg washing facility, resulting in lost sales that could not be recovered, prompting a revenue guidance adjustment to $755-$765 million [36][37] Question: What is the outlook for consumer demand? - Management indicated that consumption trends are in line with expectations, with record high volume levels for shell eggs, suggesting no demand problem [40][41] Question: What are the growth drivers for 2026? - The company expects growth to be driven more by velocity rather than distribution, with plans to capture purchase opportunities lost during the previous year [44][45] Question: Can you confirm the revenue guidance for 2026? - The company reaffirmed its revenue guidance for 2026 in the range of $930-$950 million, implying about 24% growth [48][49]

Group 1 - Vital Farms Inc. (NASDAQ:VITL) is considered an oversold stock with potential for recovery, despite a downward revision of its 2025 outlook [1][2] - BMO Capital has lowered its price target for Vital Farms to $50 from $60 while maintaining an Outperform rating, citing that the 2025 revision reflects temporary disruptions [1] - Morgan Stanley also reduced its price target to $45 from $48 but maintained an Overweight rating, noting that the company's long-term targets exceeded analyst expectations [2] Group 2 - Needham initiated coverage of Vital Farms with a Buy rating and a $45 price target, highlighting the company's strong volume-driven earnings fundamentals [3] - The long-term revenue CAGR for Vital Farms is expected to be in the low 20% range, indicating a positive outlook despite short-term challenges [1] - The company's recent Investor Day revealed management's updated long-term algorithm, which was overshadowed by the unexpected cut to 2025 revenue guidance [2]

Core Insights - Vital Farms Inc. (NASDAQ:VITL) is viewed as a strong investment opportunity for 2026 despite recent downward revisions in its 2025 projections [1][3] - Analysts from DA Davidson, TD Cowen, and BMO Capital have all adjusted their price targets for the stock, reflecting a mix of optimism and caution regarding the company's growth potential [1][2][3] Analyst Ratings and Price Targets - DA Davidson lowered its price target on Vital Farms to $47 from $52 while maintaining a Buy rating, citing investor frustration over lowered Q4 2025 projections but highlighting operational recovery [1] - TD Cowen reduced its price target to $44 from $59, also with a Buy rating, noting the company's ambitious $2 billion revenue goal for 2030 and the need to resolve production bottlenecks [2] - BMO Capital cut its price target to $50 from $60 but retained an Outperform rating, indicating that the recent setbacks are temporary and that long-term growth remains achievable [3] Company Overview - Vital Farms is a food company that packages, markets, and distributes shell eggs, butter, and other products in the US, sourcing from family farms under its brand [4]

Industry Overview - The natural foods industry has transformed from a niche market to a mainstream powerhouse, driven by consumer health consciousness and environmental awareness [1] - Consumers are prioritizing clean eating and ethical sourcing, leading to increased demand for natural and organic foods [1][2] - The global healthy foods market is projected to reach $2,101.9 billion by 2035, indicating significant growth potential [4] Consumer Trends - There is a heightened consumer preference for products with transparent sourcing and minimal processing, with organic, non-GMO, and preservative-free options becoming standard [2] - Governments are reinforcing this trend through stricter food labeling regulations, which enhances consumer trust and expands the market [2] Company Responses - Companies like The Hain Celestial Group, Inc. and Conagra Brands, Inc. are adapting to the rising demand for organic and clean-label foods, focusing on transparency, sustainability, and minimal processing [3] - United Natural Foods, Inc. (UNFI) is leveraging its extensive distribution network to connect health-focused brands with over 30,000 retail locations, achieving a 10.5% growth in its Natural segment in Q1 fiscal 2026 [6] Strategic Initiatives - UNFI is enhancing "speed-to-shelf" for innovative natural brands and has implemented lean Kaizen workshops to improve operational efficiency [7] - Beyond Meat is focusing on clean-label standards and has launched products with limited ingredients, achieving significant taste and nutrition accolades [10][11] - Vital Farms is committed to animal welfare and sustainable agriculture, with a rise in brand awareness to 33% and egg-related revenues increasing to $192.6 million in Q3 2025 [13][14] Future Outlook - Vital Farms aims to reach $1 billion in net sales by 2027, expanding its farm network and increasing production capacity [15] - General Mills is leveraging its diverse portfolio to meet consumer demands for cleaner labels and sustainable options, with a projected 25% increase in sales from new products in fiscal 2026 [18][19]

Core Viewpoint - Vital Farms, a Certified B Corporation, is actively participating in the 28th Annual ICR Conference, indicating its commitment to engaging with investors and stakeholders [1] Company Participation - Russell Diez-Canseco (President and CEO), Thilo Wrede (CFO), and Brian Shipman (VP of Investor Relations) will represent Vital Farms at the conference [1] - The conference is scheduled for January 12 and 13, 2026, in Orlando, FL, highlighting the company's strategic planning for future engagements [1] - Vital Farms will be available for one-on-one meetings, suggesting a focus on personalized investor relations [1]