Krispy Kreme shares experienced a significant surge of 6.5% following an upgrade by analysts at Truist who raised the stock to a buy rating. The boost came as analysts highlighted the undervalued business potential of the upcoming partnership with McDonald’s, where Krispy Kreme doughnuts will be available at thousands of McDonald’s locations.
Analyst Bill Chappell, in the upgrade, increased Krispy Kreme’s 12-month price target to $15 from $13. The stock reached a high of over $11.30, its peak since the announcement of the Krispy Kreme-McDonald’s collaboration in March. Despite trading above $17 upon the partnership’s reveal, the stock had dropped to its lowest point of the year a few months later.
Chappell expressed optimism that the McDonald’s partnership would drive revenue growth for Krispy Kreme in the upcoming quarters, criticizing the investors’ skepticism towards the plan. Krispy Kreme shares have faced a decline of approximately 25% year-to-date, hitting a low of $9.98 in May.
Truist’s decision to upgrade the stock took into account the trend towards healthy eating and weight management in the United States, exemplified by the success of drugs like Ozempic and Wegovy. Despite this trend, Chappell emphasized that people still enjoy indulging in sweets, indicating a continued demand for Krispy Kreme doughnuts.
In March, Krispy Kreme announced its initiative to offer its popular doughnuts at McDonald’s locations starting later this year, with nationwide availability expected by the end of 2026. Varieties such as glazed, chocolate iced with sprinkles, and chocolate creme-filled doughnuts will be freshly delivered daily to McDonald’s outlets, sold individually or in boxes of 6. The initial trial at 160 McDonald’s restaurants in Kentucky showed overwhelming consumer excitement and demand, surpassing expectations.
The collaboration with McDonald’s will significantly expand Krispy Kreme’s reach, making its doughnuts accessible in twice as many locations as currently available. While Krispy Kreme operates in 41 states, predominantly in the South where it originated in North Carolina, some states like New Mexico and West Virginia have limited stores. In contrast, McDonald’s boasts around 14,300 locations across the United States.
