Yahoo Finance Krispy Kreme Jumps After Piper Calls McDonald’s Pact a ‘Game Changer’
(Bloomberg) -- Krispy Kreme Inc.’s move to partner with McDonald’s Corp. is a “game changer” that could take the company’s stock significantly higher, according to a Wall Street firm that has turned more bullish on the doughnut company.
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Piper Sandler Cos. upgraded its rating on Krispy Kreme to overweight from neutral following last week’s announcement that the chain’s doughnuts will be sold at McDonald’s restaurants across the US starting later this year. The company is “poised for a much better next couple of years,” said analysts Brian Mullan and Aisling Grueninger.
It has been “relatively tough sledding” for Krispy Kreme during the 30 months since its initial public offering in 2021, Mullan and Grueninger wrote in a note, but the difficult period is “in the rearview mirror now and things are starting to change in real time.”
Krispy Kreme shares rose 7.3% in New York to close at $15.33. The analysts lifted their 12-month price target on the stock to $20, seeing around 30% upside to the stock from Friday’s close in their base investment case. The stock soared by a record 39% on March 26 after the partnership was announced.
Mullan and Grueninger said the partnership has set the stage for Krispy Kreme to increase availability of its doughnuts across the US for the next three years. By 2026, the analysts anticipate Krispy Kreme will sell its doughtnuts across 5,000 McDonald’s restaurants, increasing points of access in the US by around 175%.
“What the McDonald’s partnership does for Krispy Kreme is that it gives management the confidence and the ability to significantly increase its donut production capacity investments across the U.S., which it will now be able to do on an accelerated basis,” Mullan and Grueninger wrote.
“McDonald’s is obviously the catalyst here, but over a longer period of time this should benefit Krispy Kreme with other new and incremental Delivered Fresh Daily locations as well.”
(Updates stock moves at market close)
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