Why Krispy Kreme Stock Dove 16% on Friday
More than one analyst cut their price target on the struggling donut maker.
This closely followed the release of a disappointing quarterly earnings report.
10 stocks we like better than Krispy Kreme ›
Following the publication of its first-quarter results on Thursday morning, investors bailed from Krispy Kreme (NASDAQ: DNUT) stock.
On Friday, it was apparent that analysts were finding the stock distasteful, too. On the back of two pundit price target cuts, the donut slinger's share price eroded again, posting a Friday decline of more than 16%. Meanwhile, the S&P 500 (SNPINDEX: ^GSPC) traded essentially flat on the day.
Well before market open that day, Evercore ISI analyst David Palmer got the ball rolling with an updated take on Krispy Kreme. He changed his price target to $3 per share, quite the modification given his previous level was $9. He didn't change his recommendation on the beleaguered comestibles company, though, as he still rates it an in-line (hold, in other words).
According to reports, Palmer cited several troubling factors in his latest Krispy Kreme take. The state of the company's deal with fast food king McDonald's is one (Krispy Kreme has paused it for now), while ongoing weakness in the general U.S. retail sector should impact the donut maker -- which draws around 30% of its revenue from these outlets.
Citigroup is also reducing its expectations for Krispy Kreme, as analyst Jon Tower lowered his fair value assessment on the stock. In his view, it's worth $3.60 per share these days, down from the former $4.75 target. Like his Evercore ISI peer, however, Tower also maintained a neutral recommendation on the shares.
The food industry is tough, as it's susceptible to weakness in consumer sentiment, and is often dependent on trends. I don't see any trend favoring Krispy Kreme, and the McDonald's situation is awfully disheartening. I can't blame any investor for shunning this stock now.
Before you buy stock in Krispy Kreme, consider this:
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Citigroup is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why Krispy Kreme Stock Dove 16% on Friday was originally published by The Motley Fool
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