Doughnut Delight: Wall Street Firm Upgrades Krispy Kreme with Surprising Reason

Charlotte, North Carolina – As the demand for weight loss drugs rises, one Wall Street firm is challenging the notion that Americans will give up their love for treats like doughnuts. Truist Securities has upgraded Krispy Kreme to a buy rating from hold, dismissing concerns over the negative impact of certain weight loss drugs on the indulgent snack market.

Analysts at Truist Securities, led by Bill Chappell, believe that the market has already factored in the effects of glucagon-like peptide 1 (GLP-1) drugs on Krispy Kreme’s stock value. These GLP-1 agonists, such as semaglutide and tirzepatide, have gained popularity for their weight loss benefits, but Chappell argues that Americans’ preference for sweets will endure.

Chappell previously downgraded Krispy Kreme due to concerns about the lasting influence of GLP-1 drugs on snack food companies. However, he now believes that the impact has largely played out, and the company is well-positioned to weather any changes in consumer habits.

The $69 billion U.S. indulgent snack market continues to grow, despite the availability of healthier alternatives. Truist analysts suggest that while many consumers are adopting healthier diets, the demand for indulgent snacks remains strong. Krispy Kreme, in particular, appears to be insulated from shifts in the market, with Chappell indicating that there will always be a place for doughnuts in people’s lives.

Even as health-conscious trends persist, Chappell notes that Americans have a fondness for sweets. He emphasizes the importance of balance, predicting that Krispy Kreme will maintain its strong position in the indulgent snack market while continuing to attract customers looking for a treat.

Looking ahead, analysts anticipate that Krispy Kreme will expand its market share and achieve consistent sales growth in the coming years. Despite evolving consumer preferences, Chappell believes that the company has the potential to see moderate to high single-digit percentage growth, underscoring the enduring appeal of indulgent snacks like doughnuts.