Krispy Kreme’s Strategic Partnerships and Retail Expansion Drive Buy Rating Despite Short-Term Challenges

Analyst Bill Chappell of Truist Financial maintained a Buy rating on Krispy Kreme (DNUT – Research Report), with a price target of $12.00.

Bill Chappell has given his Buy rating due to a combination of factors that suggest potential growth for Krispy Kreme despite recent challenges. The company’s guidance for organic sales growth remains positive at 5-7%, which aligns with or slightly exceeds expectations, even though the overall guidance fell short of Street estimates due to factors like the Insomnia Cookies divestiture and foreign exchange headwinds. Additionally, the expansion of Krispy Kreme’s partnership with McDonald’s, aiming to reach 6,000 locations by the end of 2025, is seen as a significant driver for future revenue growth.
Moreover, Krispy Kreme’s strategic moves to expand its retail presence into major outlets like Walmart, Costco, and Target are expected to bolster sales growth over the coming years. While the stock has experienced a notable decline, Chappell believes the company’s initiatives, particularly the McDonald’s partnership and retail expansion, will contribute to a strong top-line growth trajectory. Although there are short-term challenges, the focus on long-term investments and partnerships underpins the Buy rating, with an adjusted price target reflecting current market skepticism.

According to TipRanks, Chappell is a 3-star analyst with an average return of 2.4% and a 51.48% success rate. Chappell covers the Consumer Defensive sector, focusing on stocks such as Celsius Holdings, Flowers Foods, and Central Garden Pet.