Krispy Kreme stock drops ahead of earnings, and after Truist downgrades on concerns over labor shortages

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Shares of Krispy Kreme Inc. DNUT, -4.29% took a 4.0% hit in afternoon trading Tuesday, as investors brace for the doughnut seller’s third-quarter earnings report due out after the closing bell. The report would be just the second since the company returned to the public arena in early-July. The company is expected to report adjusted earnings per share of 6 cents on revenue of $337.7 million. On Monday, one day before the earnings report, Truist analyst Bill Chappell downgraded the stock to hold from buy, and slashed his price target by 29%, to $15 from $21. “In our opinion, acute labor shortages and wage inflation currently occurring in the U.S. will slow the company’s expansion of the company’s ‘hub and spoke’ model and slow top line growth over the next few quarters,” Chappell wrote in a note to clients. “We believe slowing growth will, in turn, keep the stock’s valuation in check if not compress it further.” The stock has sunk 18.2% over the past three months, while the S&P 500 SPX, -0.44% has gained 5.5%.

This article was originally published by Marketwatch.com. Read the original article here.

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