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Investing.com - Goldman Sachs initiated coverage of Dutch Bros Inc. (NYSE:BROS) on Thursday with a neutral rating and a $75 price target, implying 9% upside potential. According to InvestingPro data, the company currently has a market capitalization of $5.57 billion and is trading above its Fair Value, with analyst targets ranging from $63 to $86.
The drive-thru beverage chain, founded in 1992, currently operates more than 1,000 stores across 18 states, serving coffee beverages, energy drinks under its Rebel brand, and refreshers. The company has demonstrated strong growth, with revenue increasing 30.42% over the last twelve months to $1.36 billion.
Goldman Sachs expressed a constructive view on Dutch Bros’s strong growth and attractive return profile, supported by mobile order capabilities, food rollout initiatives, a unique menu, and unit expansion opportunities with a more balanced development strategy.
The investment bank believes these factors could drive Dutch Bros’s long-term algorithm of over 20% total revenue growth, approximately 30% company-operated shop contribution margin, and more than 20% EBITDA growth, with estimates implying 24% revenue CAGR and 25% EBITDA CAGR from 2024 to 2027.
Despite these positive factors, Goldman Sachs noted that with Dutch Bros stock up approximately 75% over the past 12 months and trading at a 2.6x/2.0x valuation premium versus the S&P and Starbucks (NASDAQ:SBUX), they are looking for a more favorable entry point, seeing a fairly balanced risk/reward profile for the shares.
In other recent news, Dutch Bros Inc. has been the focus of several analyst reports and updates. The company recently reported first-quarter earnings that exceeded expectations, with positive trends continuing into the second quarter. Despite this, Piper Sandler adjusted its price target for Dutch Bros to $63, citing slightly lower-than-expected same-store sales growth for the second quarter. However, the company maintained its full-year guidance, indicating strong overall performance metrics.
TD Cowen reiterated a Buy rating with a $78 price target, emphasizing Dutch Bros’ strategic initiatives like mobile ordering and food offerings, which are expected to drive growth. RBC Capital also initiated coverage with an Outperform rating and an $83 price target, highlighting the company’s appeal to Generation Z and its expansion strategy. Stifel maintained a Buy rating while adjusting its price target to $82, noting the potential of Dutch Bros’ sales drivers to offset economic challenges.
These developments reflect a mixed but generally positive outlook from analysts, with confidence in Dutch Bros’ growth prospects and strategic direction. The company’s focus on innovation, expansion, and customer engagement remains central to its market strategy.
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