On Tuesday, Truist Securities maintained a Hold rating and a $13.00 stock price target for Krispy Kreme (NASDAQ:DNUT) shares. The decision follows the announcement that Krispy Kreme is set to expand its partnership with McDonald’s (NYSE:MCD), aiming to offer Krispy Kreme doughnuts in McDonald's locations across the United States by the end of 2026.
Truist Securities believes that this expansion is a significant step for Krispy Kreme, as it increases the doughnut chain's visibility and the various times consumers can enjoy their products beyond breakfast hours.
The analyst from Truist Securities pointed out that the extended 17-month testing phase for this partnership should mitigate long-term risks for both Krispy Kreme and McDonald's. Despite the notable surge in Krispy Kreme's stock, which rose over 20% today, the analyst suggests that investors should seek additional information before pursuing the stock further.
It was noted that Krispy Kreme has not updated its 2024 guidance in light of the news, and the full effects of the partnership are not expected until 2027.
The analyst also expressed interest in understanding how the partnership would affect Krispy Kreme's profitability in 2025 and beyond. Questions remain regarding the impact on Krispy Kreme's core business. The expansion is significant, as it could potentially double Krispy Kreme's access points within three years, considering McDonald's current footprint of approximately 13,000 stores in the U.S.
Despite the stock's strong performance on the day of the announcement, Truist Securities advises caution, highlighting the need for further details on the strategic implications and financial outcomes of Krispy Kreme's collaboration with McDonald's.
The firm looks forward to observing how the partnership evolves and the resulting influence on Krispy Kreme's market position and financial health in the coming years.
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