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On Wednesday, DA Davidson analyst Michael Baker revised the price target for BRC Inc. (NYSE:BRCC) shares, reducing it to $3.00 from the previous $5.00 while maintaining a Buy rating on the stock. The adjustment followed BRC Inc.’s recent earnings report, which was deemed largely consistent with expectations. With the stock currently trading at $2.09, near its 52-week low of $2.01, InvestingPro analysis indicates the stock appears undervalued, with 10+ additional ProTips available for subscribers.
The company’s earnings call shed light on the lower-than-anticipated EBITDA guidance for 2025. With current EBITDA at $15.48 million and revenue of $391.49 million, BRC Inc. anticipates an increase in earnings during the latter half of the year as the company plans to introduce its products to new retailers and expand the distribution of its energy drinks. However, the forecast for the first quarter’s EBITDA was notably subdued, attributed to rising coffee costs, heightened marketing expenditure, slotting fees, and the cycling of some favorable transactions from the previous year. For deeper insights into BRC’s financial health and growth prospects, InvestingPro offers comprehensive analysis in its exclusive Pro Research Report.
Despite these challenges, Baker highlighted several positive aspects for BRC Inc. The growth of the company’s energy drink segment is still in its early stages but shows promise. Additionally, BRC Inc. continues to experience growth in its partnership with Walmart (NYSE:WMT). Based on these factors, DA Davidson reaffirmed its Buy rating for the company’s stock.
The new price target of $3.00, set by DA Davidson, is grounded on a valuation of 1.5 times the enterprise value to sales ratio, as projected for the year 2026. This valuation reflects the research firm’s outlook on BRC Inc.’s financial performance and market potential in the coming years.
In other recent news, Black Rifle Coffee Company reported its fourth-quarter 2024 earnings, falling short of both earnings per share (EPS) and revenue forecasts. The company posted an EPS of -$0.03 against a forecast of $0.002, and revenue came in at $105.9 million, slightly below the expected $106.2 million. Despite these misses, the company saw a significant improvement in gross margin, which increased by 9.5 percentage points to 41.2%. In related developments, Telsey Advisory Group adjusted its price target for Black Rifle Coffee Company shares, lowering it from $6.00 to $4.00 but maintaining an Outperform rating. The company has been focusing on expanding its product lineup, including its new energy drink line, which has been launched in 7,000 retail locations. DA Davidson also reaffirmed its Buy rating and set a $5.00 price target, highlighting the company’s proactive communication strategy and transparency in sharing its long-term plans. Black Rifle Coffee Company aims to achieve a revenue range of $395 million to $425 million for 2025, with a gross margin expected between 37% and 39%.
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