Krispy Kreme Stock Slides After J.P. Morgan Downgrade to Underweight Rating

Krispy Kreme shares fell after J.P. Morgan downgraded the stock to Underweight from Neutral. Analyst Rahul Krotthapalli reviewed the company's proposed turnaround plan and was unimpressed. Despite a recent surge in sales and revenue, Krotthapalli believes the plan lacks specific details and does not address underlying structural issues.

Title: Krispy Kreme Stock Falls After J.P. Morgan Downgrade

Krispy Kreme shares experienced a significant drop following J.P. Morgan's downgrade of the stock to Underweight from Neutral. The downgrade was based on a review of the company's proposed turnaround plan by analyst Rahul Krotthapalli, who expressed concerns about the execution risk and underlying business trends.

Despite a recent surge in sales and revenue, Krotthapalli highlighted that the proposed turnaround plan lacks specific details and does not adequately address the structural issues facing Krispy Kreme. The analyst noted that the company's U.S. business trends continue to decline, and the proposed turnaround plan does not sufficiently mitigate this risk.

The downgrade comes as Krispy Kreme has been navigating challenging financial conditions, including a loss of £6.2 million in its UK division for the year ending 2024, attributed to the cost-of-living crisis and higher input costs. The company has initiated a multi-year turnaround plan for its UK division, but Krotthapalli believes that the execution risk remains high.

The stock's volatility has been a notable feature, with 30 moves greater than 5% over the last year. Today's move, following the J.P. Morgan downgrade, indicates that the market considers the news meaningful but not transformative. The stock is currently trading at $3.73, down 61.7% since the beginning of the year and 70% below its 52-week high of $12.42.

Investors who bought $1,000 worth of Krispy Kreme's shares at the IPO in June 2021 would now be looking at an investment worth $177.38. The stock's performance highlights the challenges faced by the company and the uncertainty surrounding its turnaround efforts.

References:
[1] https://www.tipranks.com/news/the-fly/krispy-kreme-downgraded-to-underweight-from-neutral-at-jpmorgan-thefly
[2] https://finance.yahoo.com/news/krispy-kreme-dnut-stock-know-185610590.html
[3] https://seekingalpha.com/news/4489518-krispy-kreme-slides-after-jp-morgan-joins-the-bull-camp-on-the-donut-shop-stock