Andrew Left's Citron Research issued a lengthy research report on Blue Apron Holdings Inc. with a $40 price target.
"There are hundreds of meal kit reviews online, and Blue Apron is always at the top of the list on food quality, price, and ease of use," Citron said.
Citron acknowledges that HelloFresh SE has become the dominant brand in meal kits but says that is reflected in the stock having a greater than $10 billion valuation versus Blue Apron at $160 million.
Yet, Blue Apron has superior unit economics compared to HelloFresh with 50 percent higher contribution margins, Citron argues.
On an enterprise value per customer basis, Blue Apron trades at $457 versus HelloFresh at $1,499, it added.
Citron believes that at Blue Apron's current valuation, it has "zero fundamental downside" and could be liquidated "for a minimum" of $27 a share.
Citron sees one of two scenarios to play out for Blue Apron: The company executes on its turnaround with stock at least $30 or is acquired at a "significant premium" by HelloFresh or a strategic buyer looking to expand into the meal kit category.
Citron believes the company most likely to acquire Blue Apron is Peloton Interactive Inc.