June 16, 2024

Wall Street has an appetite for Krispy Kreme — and it’s pushing the doughnut maker’s stock up to its highest level in weeks.

Shares of Krispy Kreme increased slightly to $11.35 a share after the company’s stock received an upgraded rating and a price hike on account of its partnership with McDonald’s, which it announced in March.

During that time, Krispy Kreme’s stock soared 40% after the company said it would offer three doughnut flavors at most of McDonald’s 13,500 U.S. locations by the end of 2026.

On Monday, Truist Securities upgraded its Krispy Kreme recommendation from buy to hold, and elevated the firm’s price target from $13 to $15, noting that it was time to “indulge in an under appreciated story,” the firm said in reference to the deal with McDonald’s.

Truist is also confident the booming popularity of weight loss drugs, such as Ozempic, will not impact the pastry maker’s plans to sell its doughnuts at McDonald’s nationwide. GLP-1 drugs like Ozempic are intended to be used for the treatment of diabetes or weight loss.

“The partnership will accelerate revenue growth of legacy business in the next few quarters, well before the McDonald’s rollout is complete,” analysts said. In the note, Truist added that the “the GLP-1 overhang is fully reflected in the current valuation,” and that nonetheless: “Yes, we want to eat healthy, but we like our sweets.”

In May, Krispy Kreme told investors during the company’s first quarter earnings call that it had posted its best sales quarter in the company’s history, thanks to its specialty doughnuts, including its Solar Eclipse and Valentine’s Day pastries.

It seems that the doughnut maker is aiming to keep its speciality momentum going. On Monday, Krispy Kreme said that it planned to permanently add four new flavors to its Doughnut Dots menu. The new flavors — powdered, sprinkled, cinnamon, and cookie crumb — will join the company’s Original Glazed flavor. They will be available online or in-store in a 10-count or 24-count cup, it added.

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