What Happened?
Shares of fresh produce company Calavo Growers (NASDAQ: CVGW) jumped 9.5% in the morning session after the company announced it received an acquisition offer valued at $32 per share, a significant premium to its previous closing price. The board of directors planned to review the offer, which involved a combination of stock and cash from an unnamed bidder. If the offer is accepted and the deal is completed, this should allow existing shareholders to exit their current positions at a higher price.
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What The Market Is Telling Us
Calavo’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 17.3% on the news that the company reported weak first-quarter 2025 (fiscal Q2) results, which fell short of Wall Street's estimates across all key metrics, including sales, operating profit, and earnings per share. Top-line growth benefited from higher average avocado prices, which offset a year-on-year decline in volume. The volume decline was attributed to constrained supply out of Mexico and USDA inspection delays. Looking ahead, management expects volume growth to pick up, driven by new customer wins and expanded programs with existing accounts, as well as continued strength from the California avocado season. Overall, this quarter could have been better.
Calavo is up 1.5% since the beginning of the year, but at $25.89 per share, it is still trading 12.7% below its 52-week high of $29.64 from September 2024. Investors who bought $1,000 worth of Calavo’s shares 5 years ago would now be looking at an investment worth $449.71.
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