24/7 Insights
- Wall Street expectations for where Dutch Bros Inc. (NYSE: BROS) stock is headed vary considerably.
- The coffee shop stock faces certain headwinds and risks, but some analysts still have faith in it.
Scooter’s, Ziggi’s, Human Bean. Drive-thru coffee chains are plentiful. And yet, Dutch Bros Inc. (NYSE: BROS) is managing to stand out for its strong performance and rapid growth. The question for shareholders and would-be investors is where the stock could be headed. Is it a good time to jump in before the share price soars? Or do the shares continue to struggle until the company crumples like a paper cup? Let’s see what Wall Street expects.
Why Invest in Dutch Bros?
Since going public in 2019, Dutch Bros stock is down about 6%. The company is known for its drive-thru coffee format. Its loyal and dedicated customer base considers the experience more engaging than at Starbucks with more of a human connection. The growing chain opened its first East Coast location earlier this year, and it is now one of the largest in the United States. Initial excitement for the stock began to wear off a few months after the IPO, but the shares have been on a good run this year. Is the stock poised to soar further?
Dutch Bros, the Company
The company operates and franchises more than 875 drive-thru coffee shops in the United States and also has online channels. Its offerings include a variety of hot and cold beverages, such as espresso-based drinks, protein coffee, blended freezes, and energy drinks. Dutch Bros also offers snacks, lemonade, iced tea, chai lattes, shakes, hot cocoa, and smoothies. Its brands include Dutch Bros, Dutch Bros Coffee, Dutch Bros Rebel, and Blue Rebel brands.
Dutch Bros is headquartered in Grants Pass, Oregon. It was founded in 1992 by Dane and Travis Boersma, brothers of Dutch descent. It went public on September 15, 2021. Competitors include Caribou Coffee, Peet’s Coffee, and Starbucks Corp. (NASDAQ: SBUX), as well as Dunkin’ Brands and McDonald’s Corp. (NYSE: MCD).
Dutch Bros introduced a new line-up of drinks for the summer. Recently, Wendy’s CEO joined the Dutch Bros board of directors. And when the company reported strong first-quarter results it also raised its guidance.
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Dutch Bros, the Stock
The share price is over 34% higher than a year ago, most of that gain coming in the past 90 days. The S&P 500 is up less than 22% year over year. Note that the $40.55 consensus price target is less than the 52-week high.
Out of 13 analysts who cover the stock, nine recommend buying shares. BofA Securities and TD Cowen reiterated Buy-equivalent ratings last month. Institutional investors hold about 61% of shares, including notable stakes at TSG Consumer Partners, Vanguard, and Citadel Advisors. Note that the Executive Board Chair Travis Boersma sold about $70 million worth of shares back in May. And short interest is less than 8% of the float.
Wall Street expectations for where the stock goes in the next 52 weeks vary. While at least one analyst anticipates notable downside, the highest price target indicates an even bigger gain in the share price. Moreover, the consensus projection suggests a modest boost for the stock.
| Low target | $34.00 | −13.2% |
| Mean target | $40.55 | 3.5% |
| High target | $50.00 | 27.6% |
The company faces the same headwinds and risks as other fast-food purveyors. That is, inflation cost pressures, and competition. Note that in 2022 the company stopped franchising outlets, and it also faced a boycott. Investors will also want to keep an eye on the company’s debt as well.
On the other hand, Dutch Bros remains a growth story and strong performer that continues to chip away at market leader Starbucks. Its management is optimistic, and so are fans of the company’s offerings.
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