UBS maintains Buy on Dutch Bros, reiterates $90 target

Published 28/03/2025, 14:38
UBS maintains Buy on Dutch Bros, reiterates $90 target

On Friday, UBS analyst Dennis Geiger maintained a Buy rating on Dutch Bros Inc. (NYSE:BROS) shares, with a steady price target of $90.00, following the company’s Investor Day event. The coffee chain, currently valued at approximately $5.6 billion, has caught analysts’ attention with its growth potential. According to InvestingPro data, the stock is trading above its Fair Value, though analysts maintain a strong buy consensus with an average price target suggesting further upside potential. The leadership team at Dutch Bros emphasized the significance of their distinctive people culture and strategic plans aimed at driving strong sales and store expansion. The updated growth targets presented at the event in Tempe, AZ, included approximately 20% revenue growth, with low single-digit percentage comparable sales growth and mid-teens percentage store growth. The company also projected about 30% contribution margins for company-operated shops and over 20% adjusted EBITDA growth.

Dutch Bros has revised its total addressable market estimate upward to more than 7,000 units across the United States, an increase from the previous 4,000+ units. Approximately 3,500 of these units are expected to come from existing markets, with the potential for further growth from mobile ordering, food offerings, and increased brand awareness. The company’s ambitious expansion plans are supported by strong financial performance, with InvestingPro data showing impressive revenue growth of 32.6% in the last twelve months and analysts forecasting 23% growth for the current fiscal year. Want deeper insights? InvestingPro offers 18 additional investment tips for Dutch Bros, along with comprehensive financial analysis in their Pro Research Report. Despite shares facing some pressure due to high expectations leading up to the event, including investors anticipating a slightly better first-quarter comparable sales figure, the company reported a 4.6% growth in first-quarter-to-date system sales, surpassing the consensus of 4.1% and the guidance range of 2-4%.

The positive momentum is particularly noteworthy given the difficult comparison to the previous year’s 10% growth. Geiger suggests that there may be room for Dutch Bros to exceed certain aspects of their long-term growth projections, positioning the company as one of the few in the restaurant sector with the potential for earnings surprises in 2025 and 2026. The stock has demonstrated strong performance with a 100% return over the past six months, while maintaining healthy liquidity with a current ratio of 1.76. The company’s overall financial health score on InvestingPro is rated as "GOOD," supported by solid growth metrics and cash flow management. With industry-leading store growth, sustained sales momentum, and a compelling path of multiyear catalysts that could support earnings upside, Dutch Bros shares are seen as remaining an attractive investment opportunity.

In other recent news, Dutch Bros Inc. has been the focus of multiple analyst evaluations and corporate developments. UBS has raised its price target for Dutch Bros to $90, maintaining a Buy rating, following the company’s strong fourth-quarter results, which included impressive same-store sales and customer traffic. The company has set revenue guidance for 2025 between $1.555 and $1.575 billion, with same-store sales growth estimated at 2-4%. Meanwhile, Wells Fargo (NYSE:WFC) initiated coverage with an Overweight rating and an $80 price target, highlighting Dutch Bros as a significant growth story in the consumer sector, with expectations of over 30% EBITDA growth.

Morgan Stanley (NYSE:MS) also began coverage of Dutch Bros, assigning an Overweight rating and an $82 price target, citing the company’s rapid growth and strong customer loyalty. Stifel has increased its price target to $74, maintaining a Buy rating, noting the durability of Dutch Bros’ sales layers and strategic initiatives. In corporate news, Dutch Bros appointed Kory Marchisotto as an independent director on its Board of Directors, a move seen as strategic in bolstering the brand’s growth.

The company plans to open more than 160 new shops, with capital expenditure guidance set between $240 and $260 million. Dutch Bros continues to test new sales platforms, including a food offering expected to expand sales in 2026. Investors are anticipating further insights into the company’s strategies and growth opportunities during its upcoming Investor Day.

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