Earnings Release: Here's Why Analysts Cut Their Dutch Bros Inc. (NYSE:BROS) Price Target To US$62.36
One of the biggest stories of last week was how Dutch Bros Inc. (NYSE:BROS) shares plunged 21% in the week since its latest third-quarter results, closing yesterday at US$33.77. Revenues of US$550m were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$0.20, missing estimates by 3.3%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from Dutch Bros' 24 analysts is for revenues of US$2.65b in 2027. This reflects a huge 32% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 44% to US$1.06. Before this earnings report, the analysts had been forecasting revenues of US$2.65b and earnings per share (EPS) of US$1.12 in 2027. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
Check out our latest analysis for Dutch Bros
The average price target fell 5.4% to US$62.36, with reduced earnings forecasts clearly tied to a lower valuation estimate. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Dutch Bros, with the most bullish analyst valuing it at US$95.00 and the most bearish at US$29.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Dutch Bros' past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Dutch Bros'historical trends, as the 25% annualised revenue growth to the end of 2027 is roughly in line with the 27% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 9.2% per year. So although Dutch Bros is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Dutch Bros' future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Dutch Bros analysts - going out to 2028, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Dutch Bros .
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