Dunkin' Brands Analyst Says Q2 Positives Outweigh The Negatives

Dunkin Brands Group, Inc. DNKN continues to perform well during the pandemic, although some bears are highlighting elevated expectations and unexpected store closures, according to KeyBanc Capital Markets.

The Dunkin’ Analyst: Eric Gonzalez reiterated an Overweight rating on Dunkin' Brands with a $78 price target. 

The Dunkin’ Thesis: Dunkin’s second-quarter positives far outweigh the negatives, and after Thursday's quarterly report, “we have even more conviction that these efforts are setting the chain up for future success,” Gonzalez said in a Thursday note. (See his track record here.)

The analyst named the following as key investment points for Dunkin’:

• The pace of recovery in Dunkin’s U.S. segment is going well as store volumes approach normal levels. 
• Drive-thru locations showed signs of growth despite tailwinds that benefited categories like pizza and hamburgers. 
• Store closings have reflected the positive alignment between Dunkin’s management team and store owners and the possibility of unit growth. 
• Enrollment in Dunkin’s DD-Perks program increased 110% in the second quarter, and digital orders increased 18% year-over-year overall. 

For 2020 and 2021, KeyBanc raised its EPS estimates for Dunkin’ to $2.62 and $3.08, respectively.

DNKN Price Action: Dunkin' Brands shares were up 0.55% at $69.03 at last check Friday.