Dutch Bros (BROS -1.04%) stock is trailing the market this year. While share prices of the expanding drive-thru coffee operator and franchisor have dropped nearly 5% so far in 2024, the S&P 500 index has gained about 8%.
But analysts from Piper Sandler think that has created a buying opportunity. Research analysts at the firm raised their rating on Dutch Bros from neutral to the equivalent of a buy. It's the first buy rating on Dutch Bros from the firm since it initiated coverage. On Monday, the financial services company also raised its price target on Dutch Bros from $32 per share to $37. That would reflect a gain of 21% on the stock from its current price.
Growth coffee chain stock
Many investors are well aware of the great returns from Starbucks in its years of high growth. Investors in Dutch Bros hope it will be an even better growth stock. Dutch Bros certainly has been growing. Revenue jumped more than 30% in 2023. Sales have now nearly doubled in just the past two years.
Piper Sandler analyst Brian Mullan cites a more positive outlook for the company overall, even as he monitors costs and debt related to its expansion.
The coffee chain could see additional growth this year with the implementation of a new mobile order system for its app. The company discussed the new system in its quarterly conference call last month and said it expects to be rolled out to most locations by the end of the year. That's one big reason Mullan and the analyst team think now is the time to buy Dutch Bros stock.
