Truist downgrades Krispy Kreme on weight loss drug overhang

Truist downgraded Krispy Kreme to Hold from Buy with a price target of $13, down from $20. The analyst says the current GLP-1 overhang on packaged food stocks will not dissipate for 6-12 months, if not longer. The stocks “will be stuck in a holding pattern at best” with strong potential for additional multiple contraction as the initial impact of GLP-1 use becomes more apparent, the analyst tells investors in a research note. The firm admits to having “no idea” what the impact of GLP-1s will be on overall food consumption, saying it is way too early in the cycle for anyone to have an accurate estimate. “That, in our opinion, is the problem,” writes Truist. Compounding this issue, sales growth for most food companies has primarily been driven by price over the past two years, the firm adds. It has a difficult time recommending Krispy Kreme “at least until the GLP-1 wave has started to form.”