Wall Street has an appetite for Krispy Kreme β and itβs pushing the doughnut makerβs stock up to its highest level in weeks.
Shares of Krispy Kreme increased slightly to $11.35 a share after the companyβs stock received an upgraded rating and a price hike on account of its partnership with McDonaldβs, which it announced in March.
During that time, Krispy Kremeβs stock soared 40% after the company said it would offer three doughnut flavors at most of McDonaldβs 13,500 U.S. locations by the end of 2026.
On Monday, Truist Securities upgraded its Krispy Kreme recommendation from buy to hold, and elevated the firmβs price target from $13 to $15, noting that it was time to βindulge in an under appreciated story,β the firm said in reference to the deal with McDonaldβs.
Truist is also confident the booming popularity of weight loss drugs, such as Ozempic, will not impact the pastry makerβs plans to sell its doughnuts at McDonaldβs nationwide. GLP-1 drugs like Ozempic are intended to be used for the treatment of diabetes or weight loss.
βThe partnership will accelerate revenue growth of legacy business in the next few quarters, well before the McDonaldβs rollout is complete,β analysts said. In the note, Truist added that the βthe GLP-1 overhang is fully reflected in the current valuation,β and that nonetheless: βYes, we want to eat healthy, but we like our sweets.β
In May, Krispy Kreme told investors during the companyβs first quarter earnings call that it had posted its best sales quarter in the companyβs history, thanks to its specialty doughnuts, including its Solar Eclipse and Valentineβs Day pastries.
It seems that the doughnut maker is aiming to keep its speciality momentum going. On Monday, Krispy Kreme said that it planned to permanently add four new flavors to its Doughnut Dots menu. The new flavors β powdered, sprinkled, cinnamon, and cookie crumb β will join the companyβs Original Glazed flavor. They will be available online or in-store in a 10-count or 24-count cup, it added.