Sticking With This Dutch Bros Price Target Amid Quiet Expansion Progress

We are reiterating our price target $85 and reiterating our Two rating on the shares of Dutch Bros BROS following the company’s beat and raise June quarter, which confirms the company is firing on all cylinders.

Not only did Dutch Bros lift its top-line outlook for this year to $1.59 billion to $1.60 billion from $1.555 billion to 1.575 billion, putting it ahead of the $1.59 billion market consensus, but it also upped its adjusted EBITDA forecast for the year. That line item is now forecasted to be between $285 million to $290 million, up from the $265 million to $275 million targeted in early May.

Management also reiterated its 2,029 total shop count target for 2029. During the June quarter, Dutch opened 31 new system locations, expanding into its 19^th state (Indiana). That put the company’s total system count at 1,043 compared to 982 exiting 2024. Based on management’s target of at least 160 new shops this year, we should see roughly 100 shops open in 2H 2025. Applying some simple math, if the Dutch exits 2025 with a shop count near 1,142, that means the pace of openings will need to accelerate in 2026 and 2027 to hit its 2,029 shop count by 2029.

That very much tracks with one of our key reasons for owning BROS shares. However, the accelerating pace of earnings does mean the company will see a tick up in pre-opening expenses in 2H 2025 and the ensuing quarters. Coffee prices, which account for only 10% of the Dutch’s total cost of goods sold, are locked in for 2025, and we should see some incremental benefits from falling dairy prices. While the aggregate picture points to smaller adjusted EBITDA dollars being generated in 2H 2025 compared to 1H 2025, the size of those dollars is larger than it was just a few months ago. Over time, as those pre-opening expenses are absorbed, we should see adjusted EBITDA margins normalize over the longer term.

To us, the footprint expansion with the added layering of an expanded food offering starting next year points to continued revenue, profit dollars and EPS growth. That keeps us bullish on BROS shares, and if margins hold up better than expected in 2H 2025 that would give us a reason to revisit our price target.

One of the knocks on the company is that it doesn’t make much noise as it expands its footprint. Looking at the company website’s news section, we do not see press releases touting its entrance into new areas or new store openings. We’ve called out that lack of news and how it impacts BROS shares compared to other growth companies that seem to be always in the headlines. While it can be frustrating at times, especially if the shares trade off, it also means the company’s quarterly earnings reports, where Dutch updates its expansion metrics, are more powerful events.

Consider the following dates, and let’s look at the stock price movements in the chart below:

February 12, 2025: Dutch Bros reports Q4 2024 results

May 7, 2025: Dutch Bros reports Q1 2025 results

August 6, 2025: Dutch Bros reports Q2 2025 results

Until the management team decides to call more attention to its footprint expansion, we’re willing to put up with fluctuations in BROS shares so long as that footprint expansion story remains intact.

With that in mind, as we reiterate our $85 price target, we could very well see BROS shares drift lower over the next several weeks absent any company-generated headlines. Should they find their way back near the 100-day moving average near $64.50 or slightly below, that would trigger a re-think on our Two rating.

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At the time of publication, TheStreet Pro Portfolio was long BROS.