DA Davidson Starts Krispy Kreme (KKD) at Neutral; Re-emerging Growth Accounted for in Share Price

DA Davidson initiates coverage on Krispy Kreme (NYSE: KKD) with a Neutral. PT $8.00.

DA analyst says, "Doughnut volumes drive profitability of KKD supply. Profits should scale nicely if KKD is able to grow system sales of doughnuts. The proprietary doughnut mix accounts for the vast majority of the segment’s profits, as the company has been able to pass on any inflationary pressures; the cost of the mix is based on maintaining a dollar profit per bag. We estimate from a supply perspective, wholesale doughnuts are worth more than twice the reported revenue, once waste is accounted for and adjusting for the much lower price per unit for reporting wholesale revenue."

For more ratings news on Krispy Kreme click here and for the rating history of Krispy Kreme click here.

Shares of Krispy Kreme closed at $7.20 yesterday.

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