New Leadership and Digital Marketing Tactics Set to Boost Dutch Bros Long-Term Growth: Analyst Upgrades Stock

Stifel analyst Chris O'Cull upgraded the shares of Dutch Bros Inc BROS from Hold to Buy and raised the price target from $32 to $35.

The analyst is positive about BROS' management changes and a transition plan to ensure the company has a high probability of achieving its long-term targets.

Taking too long a time to build management teams with good transition plans results in performance lags, unpaid bonuses, executives getting frustrated, and share prices falling.

In March of 2023, the company modified the points awarded per purchase in its Dutch Rewards program, reinvesting the savings in targeted offers for members and promotions designed to drive incremental purchasing behavior, says the analyst.

The company is looking at using more paid media, and its traditionally heavy focus is on retargeting to expand consumer awareness more rapidly in new markets, adds the analyst.

The company rolled out several product innovations that resonated with guests in 2023 and, most recently, kicked off 2024 with Protein Coffee.

The analyst expects beverage innovation will complement the company's digital marketing strategy, help drive Dutch Rewards program enrollment, and create new product news that helps build brand awareness in new markets.

The company has changed its go-to-market strategy with a new development approach and more paid advertising, which will improve new store volumes and reduce sales cannibalization at existing units in FY25 and beyond, writes the analyst.

Price Action: BROS shares closed lower by 0.47% at $27.73 on Tuesday. 

Photo via Wikimedia Commons