Truist Securities said 'wait' before chasing Krispy Kreme (DNUT)

Truist Securities analyst Bill Chappell reiterated a Hold rating and $13.00 price target on Krispy Kreme (NASDAQ: DNUT) following news the company announced a national expansion of its partnership with McDonald’s (NYSE: MCD) to sell Krispy Kreme doughnuts in McDonald's nationwide by the end of 2026.

The analyst commented, "This is clearly a strong development for DNUT, increasing the availability and number of occasions consumers can try a Krispy Kreme doughnut (i.e. not just for breakfast). We also believe the long testing phase (17 months) will reduce the risks to both parties over the long term. The stock has already popped more than 20% this morning which we believe is fully justified. However, we believe investors should wait for more color before chasing the stock.

No Change to 2024 guidance - We note DNUT did not alter guidance for 2024 and the full impact will not be felt until 2027. A lot can happen, from GLP-1 impact to competitive response, in three years."

In addition, the analyst notes they would like to understand how this partnership impact profitability both in 2025 and over the long term. Also, how will this news impact the core of DNUT? "McDonald's has roughly 13k stores in the US today so expanding to all stores will double the points of access for DNUT in three years," the analyst notes.

For an analyst ratings summary and ratings history on Krispy Kreme click here. For more ratings news on Krispy Kreme click here.

Shares of Krispy Kreme closed at $12.45 yesterday.

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