2023-04-05 08:22:52 ET
Dutch Bros ( NYSE: BROS ) stock rose sharply on Wednesday after Wedbush analyst shifted to a bullish stance on the coffee shop chain.
Equity analyst Nick Setyan told clients that “aggressive near-term consensus expectations are a poor reflection of management's internal expectations and consistent messaging.” However, the longer term trajectory for growth appear more achievable.
“In short, beyond Q1, we believe our comp estimates could prove conservative, resulting in 2023 revenue above the high end of guidance,” he wrote. “We estimate that each 50 bps of incremental company SSS growth equates to $1-1.8M of incremental EBITDA in 2023.”
He added that the current valuation for the restaurant operator is “an overly pessimistic assessment of its medium- and long-term annual growth algorithm.” He raised his rating to Outperform from Neutral and maintained a $37 price target. Setyan had previously shifted to Neutral exactly one year ago.
Shares of Dutch Bros ( BROS ) rose 3.7% prior to Wednesday’s market open.
Read more on why the Seeking Alpha Quant team still rates the stock a Sell .
For further details see:
Dutch Bros upgraded to Buy as Wedbush eyes long-term upside