Analyst Upgrades Krispy Kreme, Citing Uptick In July Comps

Krispy Kreme Doughnuts KKD shares jumped more than 6 percent after an analyst upgraded the shares, citing an uptick in July same-store sales. The company's shares are down more than 16 percent in the year to date and hit a 53 week low of $14.82 last month on a lower outlook and weak same-store sales in the fiscal first quarter. Wedbush's Nick Setyan said Krispy Kreme is "poised for upside" to fiscal 2015 expectations, adding that his own checks suggest "significant acceleration" in same-store sales growth starting in July. Setyan didn't cite a figure for July same-store sales gains but said stepped up promotions were responsible. Setyan upgraded the shares to Out Perform from Neutral and boosted his target to $24 a share, from $18. Strong returns from newly developed company stores as well as accelerating franchise development added to Setyan's appraisal. In July, the company said first-quarter same-store sales fell 2.2 percent. while operating income grew 6.6 percent. The company also cut its full-year earnings forecast to between $0.69 and $0.74 a share, from 0.73 to $0.79 a share. Recently the company made its fourth change in senior management this year with the departure July 28 of Bradley Wall as senior vice president of supply chain and off-premises operations. Chief Executive Tony Thompson, named to the role in June, has suggested the company may try an expanded menu offerings to boost performance. Krispy Kreme traded recently at $16.60, up nearly 7 percent.