JPMorgan downgrades Krispy Kreme on strategy reset, execution risk

JPMorgan downgraded Krispy Kreme (DNUT) to Neutral from Overweight without a price target. The recent share selloff is largely a function of Krispy Kreme’s “economically driven action” to reset its fresh doughnut delivery expansion strategy, the analyst tells investors in a research note. The firm this includes, most importantly, the temporary pause of the company’s McDonald’s (MCD) rollout currently live in 2,400 stores versus the 6,000 previously expected by this year. Following Krispy Kreme’s Q1 results, JPMorgan says it underestimated the company’s execution risk and “uneven” demand of the McDonald’s rollout plan. Krispy Kreme will be a “survivor,” but is “on a path that makes it difficult to suggest that investors should buy now,” the firm concludes0.