Analyst Bill Chappell from Truist Financial maintained a Hold rating on Krispy Kreme (DNUT – Research Report) and keeping the price target at $5.00.
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Bill Chappell has given his Hold rating due to a combination of factors surrounding Krispy Kreme’s recent developments. The termination of the partnership with McDonald’s, which initially promised a national expansion of doughnut sales, has been a significant setback. This decision was anticipated after a pause in the partnership earlier in the year, and while it was a promising venture for McDonald’s, it resulted in financial losses for Krispy Kreme.
Chappell notes that the abrupt transition from a state-level test to a national rollout may have been premature, as the operational costs varied significantly across regions. Although Krispy Kreme may still benefit from the capital expenditures associated with the partnership, the company’s margins are expected to decline before potentially recovering in 2024. Given these uncertainties and the significant drop in share price, Chappell advises investors to adopt a cautious approach and maintain a Hold position until the situation stabilizes.
Based on the recent corporate insider activity of 39 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of DNUT in relation to earlier this year.