Krispy Kreme Stock Surges After Analysts Upgrade to Buy Following McDonald’s Partnership
Topline:
The stock of Krispy Kreme saw a significant increase on Monday after analysts at Truist upgraded the stock to a buy rating. They highlighted the undervalued potential of the upcoming partnership with McDonald’s, where Krispy Kreme doughnuts will be sold at thousands of McDonald’s locations.
Key Facts:
– Krispy Kreme shares rose by nearly 6.5% following the upgrade, with analyst Bill Chappell raising the 12-month price target to $15 from $13.
– The stock reached a high of over $11.30, the highest point since the announcement of the Krispy Kreme-McDonald’s partnership in March.
– Chappell believes that the McDonald’s deal will boost revenue growth in the coming quarters, despite the initial skepticism from investors.
– Overall, Krispy Kreme shares have dropped by approximately 25% this year, hitting a low of $9.98 in May.
Surprising Fact:
Truist took into account the trend towards healthy eating in the U.S., driven by the success of weight loss drugs like Ozempic and Wegovy, but still proceeded with the upgrade due to the enduring popularity of sweets among consumers.
Key Background:
In March, Krispy Kreme announced its plan to offer its doughnuts at McDonald’s locations nationwide by the end of 2026. The initial test run at 160 McDonald’s outlets in Kentucky exceeded expectations, leading to consumer excitement and demand. This partnership will expand Krispy Kreme’s reach significantly, making its products available in twice as many locations as before.
Big Number:
Currently, Krispy Kreme doughnuts are available in 41 states, with a strong presence in the South where the company originated. In contrast, McDonald’s operates around 14,300 locations across the U.S. Analysts at Truist likened Krispy Kreme’s expansion to the success story of Chick-fil-A, which began as a regional chain before achieving nationwide popularity.
Contra:
Interestingly, the same Truist analyst who upgraded Krispy Kreme this week had downgraded the stock last October due to concerns about the impact of weight loss drugs on consumer behavior. While the analyst reversed the decision this time, the potential effects of such medications remain a point of contention.
For further reading:
– Forbes article on the collaboration between McDonald’s and Krispy Kreme
– Forbes piece on the contrasting fortunes of GameStop and Krispy Kreme stocks
– Forbes analysis on the impact of weight loss drugs on Krispy Kreme’s sales
– Forbes coverage of Krispy Kreme’s IPO and valuation
Biography:
[Include detailed biography page about Krispy Kreme, covering early history, key achievements, and notable partnerships.]
