June 22, 2024

Ozempic vs Krispy Kreme: Wall Street firm bets weight-loss drugs won’t beat doughnut sales


While the demand for weight loss drugs continues to surge, one Wall Street firm is betting that Americans’ love for doughnuts is just too robust to provide them up. 

Truist Securities on Monday upgraded Krispy Kreme to purchase from maintain, with analysts led by Bill Chappell saying that the detrimental affect of the glucagon-like peptide 1 (GLP-1) drugs has already been mirrored within the inventory’s present valuation.

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Chappell mentioned in a word that the firm’s downgrade of Krispy Kreme final yr was “due to the belief that the GLP-1 overhang on snack food companies would last for some time.” However, Chappell mentioned they imagine “this thesis has largely played out.” 

Krispy Kreme

Sign for the model Krispy Kreme outdoors their new retailer on Oxford Street in London. (Mike Kemp/In Pictures through Getty Images / Getty Images)

GLP-1 agonists are a category of Type 2 diabetes drugs that improves blood sugar management however may additionally result in weight reduction. Semaglutide, which is the energetic ingredient in Novo Nordisk’s Wegovy and Ozempic, in addition to tirzepatide, which is the energetic ingredient in Eli Lily’s Mounjaro and Zepbound, are thought-about GLP-1 drugs.

Ticker Security Last Change Change %
DNUT KRISPY KREME 11.47 +0.15 +1.37%

They have surged in recognition in recent times as individuals touted the drugs’ weight-loss results. In flip, meals executives are noticing some buyers’ habits are altering, however Truist analysts argue that American’s candy tooth is not going away.

“To be clear, healthy-living, low-sugar diets, have been around for 30 years. From Atkins bars to protein bars to sweet potato chips, there have been hundreds of “higher for you” snack alternatives offered by everyone from small startups to global packaged food companies,” Chappell mentioned. 

At the identical time, he famous how the $69 billion U.S. indulgent snack market has continued to develop. 

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Krispy Kreme

Truist Securities analysts mentioned the $69 billion U.S. indulgent snack market continues to develop. (DIMITAR DILKOFF/AFP through Getty Images / Getty Images)

It underscores how Americans “want to eat healthy, but we like our sweets,” he added. 

Krispy Kreme, particularly, is “more sheltered” than different areas of the indulgent candy market. Chappell hinted that there’ll at all times be an event to select up some doughnuts.

“Don’t be the person who brings a vegetable platter to a 9-year-old birthday party or office gathering,” he mentioned. 

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So even when the “pie shrinks,” the analysts imagine that Krispy Kreme “has more than enough opportunity” to broaden its share of the pie and constantly develop sales by a reasonable single-digit to high single-digit percentage over the subsequent few years. 



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