Krispy Kreme: Round Trip Stock Price

Krispy Kreme's (KKD) shares were goosed several months ago, after Prudential's Howard Penney recommended the stock with an advanced price target even though the company hadn't filed numbers with the SEC in well over a year. Those numbers have since been filed and its stock is close to making a complete round-trip to where it was before the hyped runup.

Adding to the downward pressure: JP Morgan analyst John Ivankoe, whose firm helped bank the company -- and who was once one of its biggest fans -- issued his first report on the doughnut maker in a considerable period. (He waited until the numbers were filed; imagine that.) While the worst may be over, Ivankoe says he kept his "underweight" ranking because other than closing stores, he doesn't seem to think much has changed. "The sales recovery plan relies upon increased coffee sales, doughnut variety and convenience store channel expansion," he wrote. "These strategies were tried before."

He adds: "The sales turnaround plan, as we understand it, is unusually, even surprisingly, similar to the brand growth efforts of the previous management team." His bottom line: "...We are unambiguous in our belief that KKD is an overpriced equity given our view of future fundamentals." And this: "...we do not believe investors are fairly compensated to take the necessary risks of completing brand turnaround..."

KKD 1-yr chart:

Comments

[Mark Van Pa...:]

Three words: Whole Wheat Donuts
My reaction: blech.

2007 Feb 26 07:28 PM

[rreinis:]

Is it too early to evaluate performance of the management team?

2007 Feb 28 02:25 AM