The firm upgraded BROS to “overweight,” and downgraded DNUT to “neutral”

J.P. Morgan Securities chimed in on coffee and donuts this morning, flipping its ratings on two large chains. The brokerage upgraded Dutch Bros Inc (NYSE:BROS) to “overweight” from “neutral,” and downgraded Krispy Kreme Inc (NASDAQ:DNUT) to “neutral” from “overweight,” seeing DNUT’s potential upside already factored in to its 23% year-to-date lead.

The firm also lifted BROS’ price target to $35 from $30. At last glance, Dutch Bros stock was up 1.6% at $28.30, earlier as high as $29.01. Just shy of positive territory for 2023, the equity has found a solid line of support at the $27 mark, though its 200-day moving average lingers above as potential pressure. Meanwhile, options traders are targeting the security at double the amount typically seen at this point, with the January 2024 35-strike call seeing the most activity. 

At last look, DNUT was down 12% to trade at $12.79, though its 40-day moving average appears to be keeping losses in check. It’s also worth noting that shorts have been building their positions, with short interest up 26% over the last month. The 13.83 million shares sold short account for a hefty 20.9% of the stock’s available float, and would take nearly 13 days to cover, at Krispy Kreme stock’s  average pace of trading.