On Thursday, Guggenheim Securities adjusted its outlook on Dutch Bros Inc. (NYSE: NYSE:BROS) shares, raising the price target to $36 from the previous $30 while continuing to hold a Neutral stance on the stock.
The firm's analysts have updated their estimates for Dutch Bros, including an increase in the 2025 adjusted EBITDA projection to $213 million, up from $199 million.
The revision comes with the anticipation that Dutch Bros will enhance its same-store sales (SSS) guidance to a low-single-digit to mid-single-digit growth rate during its upcoming earnings announcement.
Additionally, the analysts expect the company to lift its EBITDA guidance for 2024 to a range of $200 million to $210 million, up from the former forecast of $195 million to $205 million.
Despite the updated financial expectations, Guggenheim maintains a neutral perspective on Dutch Bros shares. The analysts recognize the company as a strong growth narrative but note that the stock is currently trading at a high valuation, nearly 30 times its projected 2025 enterprise value to EBITDA.
The firm also pointed out that the average unit volume (AUV) for new stores has been around $1.5 million over the past year. Although lower than the $1.8 to $2.0 million range seen a couple of years ago, this is still considered sufficient to support the company's rapid expansion plans. However, the current AUV does introduce a higher level of risk to the development trajectory.
The price target adjustment to $36 reflects these revised estimates and the balance between Dutch Bros' growth potential and the risks associated with its current market valuation.
InvestingPro Insights
Following Guggenheim Securities' updated outlook on Dutch Bros Inc. (NYSE: BROS), real-time data from InvestingPro offers additional context for investors considering the company's potential. With a market capitalization of $5.57 billion and a notable P/E ratio of 211.4, Dutch Bros is recognized for its robust growth, as evidenced by a considerable 33.09% revenue growth over the last twelve months as of Q1 2024. Furthermore, the company's stock has experienced significant price appreciation, with a 40.08% total return over the last six months and a 33.45% return over the past year.
InvestingPro Tips suggest that analysts are expecting net income and sales growth for Dutch Bros in the current year, which aligns with the positive sentiment from Guggenheim Securities. Additionally, the company's liquid assets surpass short-term obligations, indicating a healthy liquidity position. However, it is important to note that the stock is trading at high valuation multiples across various metrics, such as earnings, EBIT, EBITDA, and revenue, which may warrant caution for value-focused investors.
For those looking to delve deeper into Dutch Bros' financials and future outlook, InvestingPro offers a wealth of additional tips and insights. For instance, there are 7 more tips available that can guide investment decisions. Access these insights by visiting https://www.investing.com/pro/BROS and consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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