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On Wednesday, DA Davidson reaffirmed its Buy rating on BRC Inc. (NYSE:BRCC) shares, with a steady price target of $3.00, representing roughly 41% upside from the current price of $2.12. The firm’s analysis is based on recent Nielsen IQ monthly spending data, which tracks sales and volume trends within the coffee industry. According to InvestingPro data, analysts’ targets range from $2.50 to $4.00, suggesting potential upside in the stock despite its recent underperformance.
BRC Inc., a company competing in various coffee-related segments, including packaged coffee, concentrates, espresso, ready-to-drink (RTD) coffee, and energy drinks, has shown remarkable performance despite mixed industry results. With annual revenue of $391.49M and a healthy gross profit margin of 41.17%, the company maintains a strong market position. According to the data, industry-wide packaged coffee sales increased by 4.2% in February, marking an uptick from the 2.7% growth seen in January. While the RTD coffee sector experienced a 3.3% decline, worsening from the 1.1% decrease in the previous month, BRC Inc. has managed to defy this trend.
The company has notably excelled in the packaged coffee segment, where its sales surged by 22.8%, improving upon the 19.3% growth recorded last month. However, BRC Inc.’s RTD coffee segment saw a slight slowdown, with a 4.3% growth rate, which is a step back from the 9.6% increase seen previously.
DA Davidson’s analysis highlights BRC Inc.’s capacity to outperform in key areas of its business, indicating a strong position in a competitive market. The firm’s maintained price target suggests confidence in the company’s ongoing performance and potential for continued growth.
In other recent news, BRC Inc. reported its fourth-quarter 2024 earnings, revealing a miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of -$0.03, falling short of the forecasted $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, up 9.5 percentage points to 41.2%, and launched a new energy drink line in December 2024. Analyst firms have reacted to these developments, with DA Davidson cutting the stock target to $3.00 but maintaining a Buy rating, citing the promise of the energy drink segment and growth in partnership with Walmart (NYSE:WMT). Meanwhile, Telsey Advisory Group adjusted its price target from $6.00 to $4.00, maintaining an Outperform rating, noting Black Rifle Coffee Company’s strategic moves and improved free cash flow. The company has also been focusing on expanding its product lineup and increasing its retail presence, which has contributed to a return to positive sales growth. Despite challenges like green coffee cost inflation, Black Rifle Coffee Company remains profitable on an adjusted EBITDA basis, with plans to expand energy drink distribution further.
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