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Investing.com -- Goldman Sachs initiated coverage of Dutch Bros Inc. (NYSE:BROS) with a “neutral” rating and a 12-month price target of $75, offering a 9.4% upside from the June 25 closing price of $68.55.
Analysts cited solid long-term growth potential but flagged the stock’s 75% rally over the past year and premium valuation as limiting near-term upside.
Dutch Bros, a drive-thru beverage chain with more than 1,000 shops across 18 U.S. states, is positioned to benefit from rising mobile order usage, digital loyalty engagement, and expanded food offerings.
Founded in 1992 and public since 2021, the company draws a younger customer base with a menu led by coffee and proprietary Rebel energy drinks.
Goldman projects revenue to grow from $1.28 billion in 2024 to $2.41 billion in 2027, a 24% compound annual growth rate.
EBITDA is forecast to rise from $230 million to $452 million, or 25% CAGR, with net income growing from $56.6 million to $141.5 million.
Diluted EPS is expected to increase from $0.50 to $1.14 over the same period. Same-store sales growth is modeled at 4% annually in 2026–27, supported by mobile ordering and new food options.
Mobile order and pay, launched in late 2024, has reached 10% of transactions. Dutch Rewards members, who account for 71% of sales, have seen a 5% frequency lift after their first mobile order.
App downloads and active users are outpacing competitors, and Goldman expects mobile order penetration to rise to over 20% by 2027.
The company’s store base is expected to more than double by 2029, with a long-term addressable market of 7,000 locations based on GS Data Works analysis.
Dutch Bros plans to enter five new markets in 2025, expanding its reach to 10 of the top 20 U.S. coffee markets. Current store distribution is heavily concentrated in Texas (21%) and California (20%).
Unit economics remain strong, with FY24 shop-level contribution margin at 29.7% and average unit volume at $1.9 million.
Dutch Bros is transitioning from ground leases to more capital-efficient build-to-suit formats, expected to comprise 60% of new stores.
Build-to-suit locations deliver higher cash-on-cash returns (65% vs. 30% for ground leases) due to lower upfront costs.
Valuation remains a constraint. Shares trade at a 2.6x premium to the S&P 500 and Starbucks (NASDAQ:SBUX) on EV/EBITDA.