Analysts see 30% upside for Mission Produce amid 'avocado revolution'

Avocados have been called America’s favorite fruit. The global avocado market is projected to reach $19.8 billion in 2025 and grow to $30.2 billion by 2032, for a CAGR of 6.2%, according to Persistence Market Research. Long before Instagram breakfast posts and the health craze, entrepreneur Steve Barnard recognized the potential of ripe avocados and found a way to monetize it. Mission Produce was founded to deliver ripe avocados to store shelves. Today, the company has a market capitalization of about $880 million.

In this Oninvest report, we look at how Mission Produce operates, the risks it faces, and why its stock is seen as offering upside of a third.

Steve Barnard grew up on a farm, where his father cultivated citrus. From an early age, he knew he wanted to work in agriculture, the community appealing to him. During summer breaks, the future entrepreneur spent his free time working on his father’s and neighboring farms, recalls Barnard in an interview with journalist David Meltzer. But his greater interest lay in the business of selling fresh produce such as fruits and vegetables.

Barnard connected with a California company in the fresh produce business and arranged a meeting with its director. At 22, he was hired as a loader of lettuce and celery, but within three weeks he was promoted to foreman. His workdays stretched to 17 hours, for a pretax salary of just $120. Barnard recalls it as a test, but for him, the main thing was the experience.

Two years later, he became director of the harvest team, overseeing 400 employees, three areas, and extensive farm equipment.

In 1981, Barnard was put in charge of the avocado growing and production division. He quickly recognized the potential in avocados. Together with a business partner, he set out to build a company: they rented space and hired their first employees at $10 an hour. At the time, avocado supply exceeded demand, and farmers were worried their fruit would go unsold. Barnard thought this to be the perfect moment for vertical integration. By the spring of 1983, they had secured their first investment of $900,000. Barnard left his day job to found Mission Produce.

When asked what makes a business as unglamorous as manufacturing interesting, Barnard replies that the company's core value is making sure guacamole is always available at parties.

In its early years, the company benefited from what Barnard calls the “avocado revolution.” This was the moment when the health benefits of avocados began to be widely promoted in the U.S., while trade barriers with Mexico were removed. It marked a turning point for Mission Produce: avocados are native to Mexico, which accounts for more than one third of global production. The U.S. is the largest buyer of Mexican avocados, importing more than 80% of the country’s output.

Mission Produce also stood out as the first company to offer retailers avocados ripened and ready to eat, according to Produce Business.

Today, the company operates three main lines of business:

This vertically integrated model – growing, supplying, and marketing its own produce – provides Mission Produce with enhanced operational flexibility, supply consistency, and long-term margin potential, according to Zacks Equity Research. The structure also mitigates seasonal risk: when the summer avocado harvest in California, Peru, and Colombia end, Mission Produce sources from Mexico and Chile in the autumn.

Mission Produce went public in the autumn of 2020, selling 8 million common shares at $12 each, below the initial $15-17 per share range. The miss was due to the impact of the pandemic, Barnard recalled.

The pandemic hit the business hard. Most avocados enter the U.S. from Mexico or Peru, and trade and travel restrictions disrupted supply chains, making it difficult to get fruit to market. As a result, Mission Produce closed 2020 with revenue down 2% versus the previous year and net income off 60% at $28.8 million.

In spring 2025, the Trump administration threatened to impose a 25% tariff on Mexican agricultural products, causing turmoil for companies reliant on cross-border trade. According to Mission Produce’s second-quarter report, profit fell $1.1 million, as earnings per avocado declined amid compressed margins.

Although goods covered by the U.S.-Mexico-Canada Agreement (USMCA) were ultimately exempted from tariffs, the risk of new duties persists. Such measures could reduce supply and raise prices, as part of the added cost would inevitably be passed on to producers, importers, and consumers, said Raimzhan Baiterek, investment analyst at Freedom Broker.

Diversification remains the company’s main safeguard. Mission Produce grows avocados and mangoes in Peru, Colombia, and Guatemala, which allows it to partially offset potential disruptions from Mexico, Baiterek noted.

As of yesterday, August 21, Mission Produce shares traded at about $12.50 per share, roughly 4% above the IPO price, which Barnard once described as disappointing. Over the last 12 months, however, the stock is up nearly 20%. For the second quarter, the company reported record revenue, up 28% year over year to $380.3 million. Adjusted net income, however, more than halved to $3.1 million.

From a valuation standpoint, Mission Produce shares trade at elevated multiples. According to FactSet, the company’s forward P/E ratio stands at 20.3, well above the sector average of 14.9. Its EV/sales ratio of 0.71 is also higher than the sector average of 0.50. Even so, Mission shares rose 17.2% between early May and the end of July, outperforming both the S&P 500 (up 14.4%) and agricultural producers (up 15.9%), according to Freedom Broker.

In the near term, Mission’s main challenge remains U.S. trade policy. Bloomberg Intelligence notes that 90% of avocados consumed in the U.S. are imported from Mexico, as are 86% of tomatoes and virtually all strawberries, meaning tariffs on Mexican produce could sharply raise prices and disrupt supply chains.

At the same time, the avocado and mango market continues to expand, fueled by consumer demand for healthy food. The growth pace, however, depends on the balance between rising production and geopolitical risks. Companies with diversified global supply chains, such as Mission Produce, are better positioned to manage these threats, Freedom Broker's Baiterek said.

According to MarketWatch, Mission Produce currently has two ratings, both "buys," at an average target price of $17 per share, implying upside of roughly 35%. In late July, Zacks also gave the stock a Zacks Rank, likewise assigning a "buy" recommendation.

The AI translation of this story was reviewed by a human editor.