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Krispy Kreme’s Stock Surges Following McDonald’s Partnership
Krispy Kreme’s stock experienced a significant surge of nearly 10% at the opening of trading on Friday. This uptick followed an endorsement from Piper Sandler, applauding the doughnut maker’s latest collaboration with McDonald’s.
A Successful Partnership
Last week, Krispy Kreme and McDonald’s announced a strategic alliance to introduce Krispy Kreme doughnuts at McDonald’s outlets nationwide in the U.S. The partnership aims to have Krispy Kreme treats available at the majority of McDonald’s 13,500 U.S. locations by the close of 2026. This collaboration has already translated into positive news for the Charlotte, North Carolina-based doughnut company.
The investment banking firm, Piper Sandler, elevated Krispy Kreme’s stock, traded under the ticker symbol DNUT, from a Neutral rating to Overweight. Analysist Brian Mullan described the partnership as a “game changer,” suggesting that it could be a catalyst for a favorable shift in the company’s narrative. The firm also increased Krispy Kreme’s price target to $20 within the next year, a significant boost from the previous target of $14.
Piper Sandler emphasized that the revised price target represents a base-case scenario rather than an overly optimistic projection. The partnership with McDonald’s is anticipated to empower Krispy Kreme to enhance its doughnut production capacity investments in the U.S., enabling accelerated expansion in this area.
Although Krispy Kreme’s stock initially surged by almost 10%, it later hovered around a 6% gain after the market’s opening.
Improving Reputation
The collaboration between Krispy Kreme and McDonald’s is aligned with the doughnut chain’s efforts to bolster its standing with consumers by ensuring the delivery of fresh doughnuts across all its locations. In 2021, Krispy Kreme’s CFO, Joshua Charlesworth, disclosed that the company had elevated its fresh daily doughnut production to 100%, a significant increase from the 38% reported in the previous year.
Notably, Krispy Kreme faced a reputational setback when it began retailing doughnuts through grocery and convenience stores, where the quality sometimes fell short of its dedicated outlets. Charlesworth highlighted that the partnership with McDonald’s accelerates the development of the “delivered fresh daily channel,” reinforcing the company’s commitment to offering fresh, high-quality doughnuts.
Following the announcement of the partnership, Krispy Kreme’s stock surged by over 39%, marking its most significant single-day climb since its IPO in July 2021.
Piper Sandler remarked that the collaborative venture could represent a transformative moment for the doughnut company’s business. The upgrade and adjusted price target signal growing confidence that Krispy Kreme will leverage the partnership to enhance its market position and drive growth.
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