Is this upstart retailer the next big investment in coffee?


Wall Street has released a heavily caffeinated outlook for new public company Dutch Bros.

Shares of the upstart coffee retailer soared nearly 13% to $ 48 on Monday – making the stock one of the main trend indicators on Yahoo Finance before noon – after investment banks launched a mainly hedge on the company after its successful IPO at the end of September.

Five analysts launched a hedge with ratings equivalent to purchases, despite shares rising more than 85% since the Dutch Bros. IPO on September 15. The highest price target on Dutch Bros ($ 60) is shared by Jefferies analyst Andy Barish and Piper Sandler’s Nicole Miller Regan.

“These very attractive returns are a growth of the underlying units which will exceed 25% in the short term for the units held by the company and the mid-teens in the long term from [less than] 500 locations for a total addressable market of over 4,000. The 20% growth algorithm + EBITDA [earnings before interest, taxes and depreciation] growth is industry leading and we believe it will increase significantly and predictably over time, ”said Barish.

Barish was among several analysts calling for Dutch Bros’ potential to reach 4,000 locations over time, up from around 471 today.

The Jefferies analyst also gave Dutch Bros. high marks for its ESG efforts, which is increasingly important to institutional investors.

Dutch Brothers by car or on foot to a coffee stand, Moscow, Idaho. headquartered in Grants Pass, Oregon and is the largest privately-owned drive-thru coffee maker in the United States. (Photo by: Don and Melinda Crawford / UCG / Universal Images Group via Getty Images)

“The ESG profile is impressive, Dutch Bros. being a value-driven organization. Efforts come from the co-founder via frequent philanthropic events, well-treated staff and a goal of 100% renewable energy by 25, ”noted Barish.

It doesn’t hurt the Dutch Bros. investment case that it has entered the public markets with its well-proven business model.

In the first six months of the year, the company saw sales increase 65% to $ 180.9 million. Operating profits reached $ 9.6 million from $ 7.6 million a year earlier. The company made $ 10 million in operating profits in 2020 despite the effects of the pandemic on the restaurant industry.

Dutch Bros. President and CEO John Ricci told Yahoo Finance Live it would be “somewhere on the East Coast in the next three or four years maybe.”

And bullish analysts will likely be there to check for store openings.

Brian Sozzi is an editor and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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