Dutch Bros Downgraded to $70 by Wells Fargo, Maintains Overweight Rating

Dutch Bros Downgraded to $70 by Wells Fargo, Maintains Overweight Rating

Wells Fargo has downgraded Dutch Bros Inc. (BROS) stock to $70, maintaining its Overweight rating, according to a recent Benzinga report. The downgrade comes despite the company's strong second-quarter performance, which saw adjusted EBITDA rise 37% year-over-year to $89 million, according to a Nasdaq analysis.

Wells Fargo analyst Jason Goldberg cited the potential normalization of cost environments in the back half of 2025 and the temporary pressure on margins due to higher preopening expenses as reasons for the downgrade. Goldberg also noted that while Dutch Bros' cost discipline signals a more durable margin framework, rising coffee costs may temper near-term gains.

The stock price of Dutch Bros has declined 6.7% so far this year, compared to a 10.8% decline in the industry, Nasdaq reported. Despite the downgrade, Dutch Bros' forward price-to-sales (P/S) multiple of 4.24 remains above the industry average of 3.35, indicating a relatively strong valuation.

Wells Fargo's downgrade follows a period of strong performance for Dutch Bros, which saw a 31.1% increase in shop contribution margins in the second quarter. The company's focus on labor efficiency, supply-chain optimization, and capital-light development suggests a business model increasingly geared toward consistent, high-return growth.