Analysts at Baird and Bank of America disagreed on how to interpret Dutch Bros ( NYSE: BROS ) earnings results from Wednesday evening.
On the bullish end, Bank of America analyst Sara Senatore raised her EBITDA estimates into 2023 to $149M from a prior $147M and raised her revenue forecasts for 2022 and 2023 to $730.5M and $975.4M from the prior view of $713M and $954.1M, respectively. While she simultaneously reeled in her EPS estimates in 2022 from $0.25 to $0.24 and 2023 from $0.50 to $0.42, she remained optimistic on the company’s cost management.
“BROS pricing continues to lag its commodity inflation (11%) as it pursues a deliberate - and we believe wise - strategy of preserving value for its customers,” Senatore wrote. “Remarkably, however, BROS is experiencing just 1% labor inflation — well below even the lowest industry numbers - a testament to the attractiveness of the company as an employer and under-appreciated benefit of the high tip model, where effective wages increase apace with checks. With new stores ramping toward margin efficiency as expected we see an imminent return to historical margin profile.”
She maintained a “Buy” rating on the name alongside a $53 price target.
On the more cautious end, Baird analyst David Tarantino trimmed his price target and advised caution on the name in the near term.
“We are encouraged by the upside in Q3 total revenue performance (reflected ongoing strength for new units) and the steps that BROS has taken to protect margin performance in an inflationary backdrop, but when factoring in lingering risks related to near-term traffic performance, we are keeping a conservative approach with our 2022-2023 EBITDA estimates,” he wrote on Thursday. “We remain very bullish on longer-term growth fundamentals, but are staying patient with our near-term stock recommendation due to the uncertain macro backdrop.”
As such, he reiterated a Neutral rating and cut his price target to $36 from a prior $46 target.
Despite the bifurcation in perspectives on the earnings release, shares of the Oregon-based coffee chain charged higher on Thursday. The stock marked an 18.11% gain into afternoon trading, already nearing the $36 price target set by Baird after the earnings print .
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Analysts adjust estimates on Dutch Bros post-earnings