Dutch Bros (NYSE:BROS) Stock Falls 4.6% Following Analyst Downgrade

Key Points

• Dutch Bros shares fell 4.6% after Wells Fargo cut its price target from $70 to $55, though it maintained an “overweight” rating. Other analysts have also reduced targets, but the stock retains a “Moderate Buy” consensus and an average target of $69.84.
• The company continues to show strong operating momentum, with 13 consecutive quarters of same-store sales growth and plans to open about 185 stores this year. Its latest quarterly revenue rose 32.5% year over year and exceeded analyst expectations.
• Investors are focused on the November 4 earnings report to assess whether sales growth and store expansion can support Dutch Bros’ premium valuation, with the stock trading at roughly 58 times earnings.

Dutch Bros Inc. (NYSE:BROS - Get Free Report)'s share price traded down 4.6% on Wednesday after Wells Fargo & Company lowered their price target on the stock from $70.00 to $55.00. Wells Fargo & Company currently has an overweight rating on the stock. Dutch Bros traded as low as $42.44 and last traded at $41.8010. Approximately 282,810 shares traded hands during mid-day trading, a decline of 93% from the average session volume of 4,282,445 shares. The stock had previously closed at $43.82.

BROS has been the topic of a number of other reports. Oppenheimer reaffirmed a "positive" rating on shares of Dutch Bros in a report on Wednesday, September 30th. Jefferies Financial Group cut their price target on shares of Dutch Bros from $75.00 to $60.00 and set an "overweight" rating for the company in a report on Tuesday, September 29th. Seaport Research Partners initiated coverage on shares of Dutch Bros in a report on Wednesday, September 16th. They issued a "buy" rating and a $50.00 price target for the company. Citigroup restated a "buy" rating on shares of Dutch Bros in a research report on Thursday, August 6th. Finally, JPMorgan Chase & Co. lowered their price objective on shares of Dutch Bros from $75.00 to $60.00 and set an "overweight" rating on the stock in a research note on Tuesday, September 29th. One research analyst has rated the stock with a Strong Buy rating, twenty-one have issued a Buy rating and four have issued a Hold rating to the stock. Based on data from MarketBeat, Dutch Bros currently has an average rating of "Moderate Buy" and an average price target of $69.84.

Insider Activity

In related news, Director Todd Penegor acquired 2,000 shares of the business's stock in a transaction dated Thursday, August 13th. The stock was bought at an average price of $51.56 per share, for a total transaction of $103,120.00. Following the transaction, the director owned 7,358 shares of the company's stock, valued at approximately $379,378.48. The trade was a 37.33% increase in their ownership of the stock. The purchase was disclosed in a legal filing with the Securities & Exchange Commission, which is available through this hyperlink. Corporate insiders own 38.90% of the company's stock.

More Dutch Bros News

Here are the key news stories impacting Dutch Bros this week:

• Positive Sentiment: Wells Fargo maintained an “overweight” rating and TD Cowen maintained a “buy” rating. Although both firms reduced their price targets to $55, that target still implies substantial potential upside from recent levels, suggesting analysts believe the recent selloff may be overdone. Benzinga and Tickerreport analyst coverage
• Positive Sentiment: Dutch Bros continues to report same-store sales growth—now for 13 consecutive quarters—and plans to open approximately 185 stores this year. Its drive-thru-focused model, brand culture and beverage customization remain important growth drivers. Same-store sales and store expansion article
• Neutral Sentiment: Investors are increasingly focused on the upcoming earnings report, scheduled for November 4. Results will indicate whether sustained same-store sales momentum and new-store openings are sufficient to support the company’s growth outlook and valuation. Upcoming earnings article
• Neutral Sentiment: Potential new locations in Tacoma, Washington, and Hoover, Alabama, highlight Dutch Bros’ ongoing geographic expansion. However, the Hoover proposal faces objections from a competing coffee shop, creating some uncertainty around that site. Tacoma expansion article
• Negative Sentiment: The reductions in price targets from both Wells Fargo and TD Cowen signal more cautious expectations, even though both firms remain bullish. Investors also remain concerned about whether Dutch Bros can achieve its store-opening target and justify its premium valuation after the recent decline. Dutch Bros valuation article

Hedge Funds Weigh In On Dutch Bros

A number of hedge funds have recently modified their holdings of BROS. Wellington Management Group LLP lifted its holdings in shares of Dutch Bros by 38.0% during the second quarter. Wellington Management Group LLP now owns 3,090,882 shares of the company's stock valued at $221,956,000 after purchasing an additional 851,075 shares during the last quarter. Danica Pension Livsforsikringsaktieselskab acquired a new position in shares of Dutch Bros in the 1st quarter valued at $33,569,000. Hyperion Asset Management Ltd increased its stake in Dutch Bros by 104.4% in the 3rd quarter. Hyperion Asset Management Ltd now owns 1,222,532 shares of the company's stock worth $47,141,000 after purchasing an additional 624,488 shares in the last quarter. Bank of America Corp DE increased its stake in Dutch Bros by 33.4% in the 1st quarter. Bank of America Corp DE now owns 1,814,815 shares of the company's stock worth $91,939,000 after purchasing an additional 454,036 shares in the last quarter. Finally, Bank of New York Mellon Corp increased its stake in Dutch Bros by 58.1% in the 1st quarter. Bank of New York Mellon Corp now owns 1,044,545 shares of the company's stock worth $52,917,000 after purchasing an additional 384,011 shares in the last quarter. 85.54% of the stock is currently owned by institutional investors and hedge funds.

Dutch Bros Trading Down 4.0%

The company has a fifty day simple moving average of $43.74 and a 200-day simple moving average of $54.13. The company has a current ratio of 1.35, a quick ratio of 1.19 and a debt-to-equity ratio of 0.20. The stock has a market cap of $7.35 billion, a price-to-earnings ratio of 58.41, a P/E/G ratio of 1.52 and a beta of 2.31.

Dutch Bros (NYSE:BROS - Get Free Report) last posted its quarterly earnings data on Wednesday, August 5th. The company reported $0.33 EPS for the quarter, beating analysts' consensus estimates of $0.29 by $0.04. The company had revenue of $550.85 million during the quarter, compared to analyst estimates of $525.38 million. Dutch Bros had a net margin of 4.91% and a return on equity of 10.01%. The business's quarterly revenue was up 32.5% on a year-over-year basis. During the same period in the prior year, the firm earned $0.26 earnings per share. On average, research analysts forecast that Dutch Bros Inc. will post 0.88 earnings per share for the current fiscal year.

About Dutch Bros

Dutch Bros Inc is a drive-thru beverage company that operates and franchises coffee shops across the United States. The company is known for its made-to-order drinks, fast service and community-focused brand.

Its menu includes hot, iced and blended coffee beverages, along with specialty drinks such as energy drinks, teas, lemonades, smoothies and other noncoffee refreshments. Dutch Bros also offers packaged products and branded merchandise through select locations and digital channels.

Dutch Bros was founded in 1992 in Grants Pass, Oregon, by brothers Dane and Travis Boersma.

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