In a remarkable turn of events, HelloFresh, previously one of the weakest performers in the MDax stock index, initiated a recovery attempt this Tuesday. The cooking box supplier’s shares soared by 7.8 percent, reaching 12.31 euros. This surge was fueled by an upgrade from “equal weight” to “overweight” by Morgan Stanley, a leading U.S. bank. Analyst Luke Holbrook highlighted the overlooked potential of HelloFresh’s Factor ready meals brand, sparking renewed investor interest.

HelloFresh’s journey in the stock market has been challenging in recent times. In 2023, it was the second-weakest MDax stock, with a significant 30 percent decline in share price. The onset of 2024 brought little relief, as the company experienced a further decline of nearly 21 percent. However, Tuesday’s recovery has trimmed the annual loss to approximately 14 percent.

Morgan Stanley’s Luke Holbrook has a different perspective on HelloFresh’s potential. According to him, the market has been narrowly focused on HelloFresh’s core cooking box business, overshadowing the impressive growth of its Factor division. Holbrook argues that Factor’s robust performance alone justifies the company’s entire market valuation, suggesting that investors might be missing out on a significant growth opportunity.

HelloFresh gained significant traction in the stock market during 2020 and 2021, amidst the COVID-19 pandemic. The lockdowns and public hesitancy in frequenting restaurants played a major role in bolstering the demand for its cooking boxes. However, since reaching its peak in November 2021, HelloFresh shares have plummeted by up to 88 percent, coinciding with the pandemic’s diminishing impact.

Interestingly, HelloFresh wasn’t the only online sector stock to recover on Tuesday. Zalando, an online fashion retailer and the biggest DAX loser in 2024, saw its shares increase by 2.6 percent. Additionally, in the MDax, Delivery Hero’s shares experienced a 3.3 percent rise. This indicates a broader trend of recovery in the online sector, which had been struggling previously.

HelloFresh’s recent stock performance, catalyzed by Morgan Stanley’s optimistic analysis, highlights the dynamic and sometimes unpredictable nature of the stock market. As investors reassess the potential of HelloFresh’s Factor division, it’s a reminder of the importance of looking beyond immediate challenges to see long-term growth opportunities. Will this mark a sustained turnaround for HelloFresh and the broader online sector? Only time will tell.