Tattooed Chef ( NASDAQ: TTCF ) shares declined by double digits on Tuesday after printing misses on top and bottom lines, losing the support of some previously bullish analysts.
Alongside the headline misses for the second quarter , the company’s updated outlook reflected increased margin pressures. The California-based plant-based food company now expects gross margin to fall to a range of 8 to 10%, down from prior guidance of 10 to 12% as inflationary pressures impact the business.
“We certainly experienced some challenges during the first half of the year, across the board inflationary pressures impacted our operations, especially our gross profit which includes domestic and international freight costs that have risen dramatically,” CEO Sam Galletti explained.
While he added that the company is making strides to counteract these pressures on the bottom line, they are expected to persist into the coming quarters, causing the cut to guidance.
Shares fell sharply after the result and ensuing commentary, sustaining a 10.3% drop on Tuesday. The results also prompted some previously bullish analysts to lose faith, downgrading the stock from "Buy" to "Hold" equivalent ratings.
“While the company continues to show top-line growth and distribution gains, margins remain choppy and may not show material improvement until mid-2023,” Roth Capital told clients on Tuesday. “For these reasons we will watch for a better entry point.”
Alongside the downgrade, the firm moved its price target from $12 to $9.
Read the earnings call transcript .
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Tattooed Chef shares tumble after earnings miss, analyst downgrade