BRCC stock is a buy, Roth says

Following the company’s fourth quarter results, Roth MKM analyst George Kelly has maintained his “Buy” rating on BRC (BRC Stock Quote, Chart, News, Analysts, Financials NYSE:BRCC).

On March 6, BRC reported its Q4 and fiscal 2023 results. In the fourth quarter, the company posted Adjusted EBITDA of $12.1-million on Net Revenue of $119.7-million, a topline that was up 26.1 per cent over the same period in 2022.

“Black Rifle continues to build momentum as a brand, as an efficient, well-run company, and most importantly, in its ability to impact the veteran and first responder community. We are one of the fastest growing brands in the coffee category, with bagged coffee growing at 18x the category and RTD coffee 4x the category,” said CEO Chris Mondzelewski. “Our brand awareness is now 29%, a 400bps increase since this past summer (Q3 2023), and we continue to have the #1 Net Promoter Score among coffee brands. Additionally, we continue to find ways to generate efficiency in our business, driving faster decision making and a stronger bottom line. Above all, Black Rifle continues to press our mission forward to serve the veteran and first responder community. Our Veterans Day partnership with the UFC and Hunter Seven Foundation raised over $250,000 in one weekend for Veterans battling cancer. I am honored to have the opportunity to lead this proud organization.”

“We reiterate our Buy rating following BRCC’s 4Q report and FY24 guide. We believe management is wise to focus on efficiency, margin, and ROI, and
believe that in time BRCC can carry a more predictable and profitable financial model.”

In a research update to clients March 7, Kelly maintained his “Buy” rating and one-year price target of $6.00 on BRCC.

The analyst thinks the company will post EBITDA of $32.1-million on revenue of $445.0-million in fiscal 2024.

“Management has taken important steps to improve the RTD business by rightsizing inventory through barter transactions and write-downs, and driving margin expansion through manufacturing and logistics efficiencies,” the analyst added. “BRCC continues to outpace the relatively weak category and has grown ACV to 43%. Like FDM, RTD should see a national rollout by year-end 2025, and we expect additional margin improvements as RTD scales. Management also hinted at coming innovation in the segment.”