Dutch Bros (BROS 3.84%) stock could deliver a bracing, caffeinated kick to your portfolio. That’s the opinion of one analyst following the company who recently raised his price target on its shares. That lift was substantial, too.
Buy this growing java slinger, says analyst
For those who might be unfamiliar, Dutch Bros operates a fast-growing chain of coffee shops throughout the U.S. The company has plenty of potential in front of it, according to Chris O’Cull of Stifel Financial. Last Friday, this prompted him to move his price target to $62 per share, up $9 from his previous target of $53. O’Cull also reiterated his buy recommendation on the stock.
According to reports, the analyst wrote in his update that Dutch Bros likely achieved comparable sales growth around its estimate of 1.5% year-over-year in the fourth quarter. He added that it appeared to have benefited from an advertising push into some of its nontraditional markets, and effectively engaged customers with its Dutch Rewards loyalty program.
O’Cull also addressed Dutch Bros’ assertive push into an order-and-pay system, which he said rose at a brisk (7%) clip within the overall sales channel mix in the third quarter. He is eager to see the figure for the fourth quarter, and added that the company’s efforts to improve customer throughput are critical to watch.
A stumbling rival
In a market dominated by the ubiquitous Starbucks, it’s admirable that another coffee slinger is finding a way to maneuver its way to relevance. Dutch Bros has done a solid job of distinguishing itself from the java giant, and its top-line growth rates have been quite impressive. Starbucks is currently struggling to refresh its business, which offers the upstart a real opportunity to fill the void. This is a stock to watch, in my view.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Starbucks. The Motley Fool recommends Dutch Bros. The Motley Fool has a disclosure policy.
