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On April 5, Piper Sandler analyst Brian Mullan boosted Krispy Kreme, Inc. (NASDAQ:DNUT) from Neutral to Overweight, setting a new price target of $20.00 up from $14.00. This adjustment comes on the heels of Krispy Kreme, Inc. (NASDAQ:DNUT) recent nationwide collaboration with McDonald’s (NYSE:MCD), a move Piper Sandler views as potentially transformative for the doughnut chain’s future. Piper Sandler expressed confidence in Krispy Kreme, Inc. (NASDAQ:DNUT) prospects, signaling that the challenges the company faced since its IPO about 30 months ago are now receding. With the new partnership as a catalyst, Piper Sandler foresees a positive shift in the narrative surrounding Krispy Kreme. The analyst from Piper Sandler believes the McDonald’s partnership holds significant transformative potential for Krispy Kreme, Inc. (NASDAQ:DNUT), indicating a brighter future for the doughnut brand. This strategic alliance is anticipated to reshape market perception and investor sentiment toward Krispy Kreme, which has encountered hurdles since its market debut. Regarding financial outlook, Piper Sandler set a fresh price target of $20.00 for Krispy Kreme, Inc. (NASDAQ:DNUT), envisioning a potential 40% upside over the next 12 months. The firm emphasized that this target represents a base case scenario rather than an overly bullish projection. The upgrade and revised price target mirror Piper Sandler’s increasing confidence in Krispy Kreme’s capacity to capitalize on its collaboration with McDonald’s to spur growth and enhance its competitive stance. This updated perspective suggests investors may reap substantial rewards if Krispy Kreme, Inc. (NASDAQ:DNUT) effectively executes its strategic initiatives.

Baron Growth Fund made the following comment about Krispy Kreme, Inc. (NASDAQ:DNUT) in its Q3 2023 investor letter:

“We increased our holding in Krispy Kreme, Inc. (NASDAQ:DNUT), an omni-channel manufacturer and retailer of doughnuts. Krispy Kreme sells its product through its owned and franchised doughnut shops, and in grocery and convenience stores through its Delivered Fresh Daily (DFD) network. Krispy also sells via e-commerce. Krispy Kreme is successfully executing its plan to grow DFD points of access by 10% to 15% annually. It now services nearly 13,000 points of access in 37 countries by leveraging over 400 doughnut producing hubs worldwide.

We believe that Krispy Kreme is making consistent progress along its core growth vectors. In its most recently reported quarter, the company grew revenue 11.4% organically as it benefited from pricing, growth in premium specialty doughnuts, and the growth of DFD. Within the U.S., sales per hub grew 9%, while average sales per DFD location increased by 16%, indicating the long growth runway that exists within its existing footprint.

We remain excited by the trial with McDonald’s in the Louisville, Kentucky area, which presently includes 160 locations. To date, sales at McDonald’s have proven to be incremental to existing donut shop and DFD sales in the region, and Krispy Kreme has been able to successfully serve these additional points of access from its existing hub network. We believe that a successful trial in Kentucky could ultimately lead to a broader rollout across McDonald’s restaurants and may also motivate additional quick service restaurant chains to contemplate a similar partnership with Krispy Kreme.”