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On Wednesday, Telsey Advisory Group adjusted its price target on BRC Inc. (NYSE:BRCC) shares, reducing it from $6.00 to $4.00, while continuing to endorse the stock with an Outperform rating. The stock, currently trading at $2.15, has seen a significant decline of 47% over the past six months. According to InvestingPro analysis, the stock appears undervalued, with additional metrics suggesting it’s in oversold territory. Telsey cited Black Rifle Coffee Company’s efforts to grow as a consumer brand, noting the company’s strategic moves over the past year. Black Rifle has streamlined its operations, optimized its business structure, lowered overhead costs, and reduced inventory, all contributing to an improved free cash flow. With a market capitalization of $458 million and annual revenue of $391 million, the company maintains a healthy current ratio of 1.27, indicating strong liquidity to meet short-term obligations.
The company’s focus has shifted to expanding its product lineup, including the introduction of new flavors, package sizes, and ventures into new categories like Black Rifle Energy. The energy drink has seen a promising launch, now available in 7,000 retail locations, achieving 17% all-commodity volume (ACV) in the first quarter of 2025, with goals to reach 20%-30% within a year and 70%-80% by 2027.
Black Rifle’s strategy includes acquiring new retail customers, increasing the variety of stock-keeping units (SKUs) with current partners, and growing the ready-to-drink (RTD) coffee and energy drink sectors. These efforts have contributed to a return to positive sales growth, projected between 1% and 9% for 2025. The anticipated growth is expected to be even stronger when considering factors from the previous year, such as barter transactions and loyalty reserves.
Despite facing challenges like green coffee cost inflation and initial investments for Black Rifle Energy, Black Rifle has managed to remain profitable on an adjusted EBITDA basis, generating $15.48 million in the last twelve months. However, the profitability did fall short of Telsey’s expectations. Want deeper insights? InvestingPro offers 12 additional exclusive tips and a comprehensive Pro Research Report for BRCC, helping investors make more informed decisions. Telsey’s revised 12-month price target for BRC Inc. is based on an enterprise value-to-sales (EV/sales) multiple of approximately 2.0x, applied to the new sales forecast of $405 million for 2025. The firm believes Black Rifle is progressing, though at a slower pace than initially anticipated, and maintains a positive outlook for the stock’s future performance. Analysts tracked by InvestingPro expect the company to return to profitability this year, with consensus targets ranging from $2.50 to $4.00 per share.
In other recent news, Black Rifle Coffee Company (BRCC) reported its fourth-quarter 2024 earnings, which fell short of analyst expectations. The company posted an earnings per share (EPS) of -$0.03, missing the forecasted $0.002, and revenue was reported at $105.9 million, slightly below the expected $106.2 million. Despite these misses, the company showed a significant improvement in its gross margin, which increased by 9.5 percentage points to 41.2%. Additionally, wholesale revenue rose, comprising 63% of total sales, up from 57% the previous year. In a related development, DA Davidson maintained its Buy rating for BRC Inc., with a price target of $5.00, following the company’s strategic announcements at the ICR Conference. The company also launched a new energy drink line in December 2024, which is expected to contribute to its growth in 2025. Looking ahead, BRCC has set ambitious targets for the coming years, including a revenue range of $395 million to $425 million for 2025. The company aims to expand its energy drink distribution and achieve a 10-15% revenue compound annual growth rate (CAGR) over three years.
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