Blue Apron Holdings, Inc. (NYSE: APRN) shares jumped more than 18 percent on Monday after Wall Street analysts initiated positive coverage of the meal-delivery kit company.
Goldman Sachs, one of the IPO underwriters for Blue Apron, initiated coverage of the company's stock with a buy rating and a price target of $11.
Goldman's analysts Heath Terry said: “Blue Apron's rapid growth has drawn at least 20 competitors into the category in the US alone, leveraging a collective $345mn in venture investment in the last 18 months. We see this hyper-competition as the primary source of Blue Apron's rising costs and slowing growth and an eventual key to both improving.”
Other firms also gave positive rating for the meal-delivery kit company. RBC Capital initiated coverage with outperform rating and a target price of $10. SunTrust has a target price of $12 with a buy rating.
Blue Apron shares surged as much as 18.32 percent to $7.75 a share in the early trading on Monday. The stock has been under pressure since it went public last month. It closed at $6.55 a share on Friday, about 34.5 percent down from its IPO Price.
The weak performance of the stock is due to concerns over increasing competition in the meal delivery kit market. Investors are afraid that e-commerce giant Amazon’s potential entry into the market may take away some market shares from Blue Apron.