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Krispy Kreme falls following earnings, GLP-1 trend 'puts a cloud' over snack stocks

Published 09/11/2023, 17:32
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Krispy Kreme (DNUT) shares are down more than 9% Thursday after it reported earnings that disappointed investors. However, analysts noted that the GLP-1 trend didn't have an impact on the company's quarter.

The company reported Q3 EPS of $0.03, $0.03 worse than the analyst estimate of $0.06, while revenue, which grew 7.9% YoY, came in at $407.4 million versus the consensus estimate of $413.87 million.

Despite the consensus miss, the company's revenue growth during the quarter was boosted by its U.S. business, which delivered 10.2% organic growth in the quarter, driven by growth across all sales channels.

Looking ahead, the company sees FY2023 earnings between $0.31 and $0.34 per share, versus the consensus of $0.32, with revenue for the period from $1.65 billion to $1.68 billion, versus the consensus of $1.69 billion.

At the end of October, Truist analysts downgraded shares of Krispy Kreme to Hold from Buy, stating that the GLP-1 overhang for the company is "here to stay."

However, following today's earnings report, the firm said they believe the core focus of investors is U.S. sales trends, a metric that is now under the GLP-1 microscope.

"While we do not believe GLP-1 had any impact on the business, we continue to believe the trend puts a cloud over indulgent snack stocks," Truist said in a note to clients.

While the firm, which maintained a Hold rating and $13 price target on the stock, views the earnings release as "fine," they believe the company "really needed a beat and raise on the sales line to get the stock moving forward."

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