Why Dutch Bros Was Climbing Again Today
Shares of Dutch Bros (NYSE: BROS) were moving higher again, continuing a surge from earlier in the week after the drive-thru coffee chain delivered impressive results in its first-quarter earnings report.
Today, the coffee slinger seemed to benefit from a Wall Street upgrade, reflecting the strong results in its recent earnings report.
As of 1:17 p.m. ET, the stock was up 8%.
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Dutch Bros gets a nod from Wall Street
TD Cowen upgraded its rating on Dutch Bros from hold to buy this morning and gave the stock a price target of $46, up from $33.
Analyst Andrew Charles said he saw an "asymmetric risk/reward" in the stock, as he sees strong same-store sales growth and improved unit economics. The analyst raised his adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates through 2026.
Finally, he said the shares could double within three years, which is the type of comment that will attract interest in a stock today.
Is Dutch Bros a buy?
Dutch Bros delivered arguably its strongest report as a publicly traded company yet on Tuesday, as it showed off strong top-line growth, improving margins, and continued store expansion.
Same-store sales jumped 10%; the company reached average unit volumes of $2 million for the first time, and it gained significant operating leverage to deliver a generally accepted accounting principles (GAAP) operating profit of $25.6 million, or a margin of 9%.
Dutch Bros looks like a much healthier business than it was just a year ago, and it certainly has the potential to double if it maintains its strong top-line growth rate, as it still has a lot of room for expansion as it grows across the country.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
