Stock Story -
What Happened: Shares of coffee chain Dutch Bros (NYSE:BROS) jumped 7.1% in the morning session after UBS upgraded the stock's rating from Neutral to Buy, citing "energizing growth potential." The analyst assigned a $39 price target, which implied a potential 20% upside from where shares traded before the upgrade was announced.
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What is the market telling us: Dutch Bros’s shares are very volatile and over the last year have had 15 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago, when the stock dropped 25.9% on the news that the company reported second-quarter earnings results. Its gross margin missed analysts' expectations, and its full-year revenue guidance slightly missed Wall Street's estimates, the latter seeming to drag shares down.
On the other hand, Dutch Bros blew past analysts' EPS expectations. Its revenue also outperformed Wall Street's estimates. Zooming out, we think this was a mixed yet weaker quarter for the company given the soft guidance.
Dutch Bros is up 4.6% since the beginning of the year, but at $32.46 per share it is still trading 24.2% below its 52-week high of $42.81 from July 2024. Investors who bought $1,000 worth of Dutch Bros’s shares at the IPO in September 2021 would now be looking at an investment worth $885.49.
