Shares of coffee-based beverages provider Dutch Bros (NYSE:BROS) are tanking today after its mixed first-quarter numbers were followed by a major ratings downgrade at J.P. Morgan.
In Q1, revenue rose 29.6% year-over-year to $197.3 million but lagged estimates by ~$11.7 million. A flat bottom line though came in better than the Street’s expectations of a net loss per share of $0.03.
The company opened 45 outlets during the quarter while also witnessing an expansion in margins. At the same time, System same-shop sales dropped by 2% with sales gains coming from new openings.
Looking ahead, for the full-year 2023, the company expects to open at least 150 outlets. Revenue is anticipated between $950 million and $1 billion alongside an adjusted EBITDA of $125 million.
Following the results, J.P. Morgan analyst John Ivankoe has lowered the rating on BROS to a Hold from a Buy alongside a $32 price target. Ivankoe sees challenges ahead for BROS as its rapid rate of outlet openings could potentially put a strain on the balance sheet.
Overall, the Street has a $37.33 consensus price target on BROS pointing to a 25.5% potential upside in the stock.
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