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Citi cuts BRC Inc. price target to $4.35 on second-quarter sales

EditorLina Guerrero
Published 08/13/2024, 04:48 PM
BRCC
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On Tuesday, BRC Inc. (NYSE:BRCC) experienced a revision in its stock outlook as a Citi analyst adjusted the company's price target. The new target is set at $4.35, down from the previous $5.75, while the firm maintained a Neutral rating on the shares. This change comes in the wake of BRC Inc.'s second-quarter sales performance, which did not meet expectations.

The company reported a decline in sales growth of 3.2% for the second quarter of 2024, a significant deviation from the anticipated 9.5% increase. Despite the sales shortfall, BRC Inc. demonstrated some positive financial outcomes.

The gross margin outperformed predictions, coming in at 41.9% compared to the forecasted 41.0%. This success was attributed to supply chain efficiencies, particularly improvements in distribution and logistics costs, as well as a favorable product mix leaning towards the higher-margin FDM channel.

Additionally, BRC Inc.'s adjusted EBITDA for the quarter was reported at $8.5 million, surpassing the analyst's estimate of $4.4 million. However, the positive note on margins and adjusted EBITDA was overshadowed by the company's downgraded guidance on its 2024 sales growth. The revised outlook has led to a decrease in confidence in BRC Inc.'s management team and the company's ability to meet its financial targets.

The analyst's commentary highlighted the disappointing nature of the guidance downgrade, pointing out its implications for investor trust in the company. The lowered sales growth forecast has raised concerns about the future performance of BRC Inc. and its operational capabilities.

In other recent news, Black Rifle Coffee Company (BRCC) presented their Q2 2024 financial results, revealing both achievements and challenges. The company reported a higher than expected gross margin of 42% and an 8% growth in their wholesale channel.

A new product, Black Rifle Energy, was announced, and the company maintained a strong performance in traditional and online retail channels. Improved cost management and hedging against rising green coffee prices contributed to the favorable gross margins.

BRCC adjusted their 2024 revenue guidance to between $385 million and $415 million, while increasing their gross margin forecast to 39%-42%.

InvestingPro Insights

Recent data from InvestingPro provides a deeper look into BRC Inc.'s (NYSE:BRCC) financial landscape. With a market capitalization of approximately $794.84 million, the company is navigating through challenging times. The stock's performance over the last week has seen a steep decline, with a price total return of -33.96%, which aligns with the analyst's concerns regarding the company's recent guidance downgrade.

InvestingPro Tips suggest that BRC Inc.'s stock is currently in oversold territory, indicating potential for a rebound, and analysts predict the company will be profitable this year despite not being profitable over the last twelve months. These insights may offer some hope to investors looking for a silver lining amidst the recent downturn. Additionally, the company operates with a moderate level of debt and does not pay a dividend, which could influence investment decisions depending on individual investor strategies.

Investors can find further insights and an additional 9 InvestingPro Tips for BRC Inc. by visiting https://www.investing.com/pro/BRCC. These tips could provide valuable context and help investors make more informed decisions about their portfolio strategy in light of the company's current financial situation and market performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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