If you had a target of $11 on Krispy Kreme (NASDAQ: KKD) when the stock was at $6.33 and then the company reported a horrible quarter and the stock tanked more than 38%, what would you?If you're CIBC, you would issue an "oops", but still manage to maintain an authoritative tone. CIBC "removed" their price target of $11. Not lowered, just removed. Poof. Gone!
The analyst pointed out, quite correctly, that many of the cures management talked about in the earnings release and on the conference call have already been tried or are currently in place. The company is also facing a liquidity crunch, and declining revenues are doing little to help that.
But CIBC really should have seen a lot of this coming. Herb Greenberg, among others, has been diligently explaining all that is wrong with this company and stock for awhile and, based on the price/sales ratio the stock was commanding, the buyout rumors appeared to be completely unfounded.
In other news, Krispy Kreme announced today that it has begun the "search for the ultimate Krispy Kreme doughnut dessert recipe. Join the fun and submit an original recipe using any variety of Krispy Kreme doughnuts for a chance to win Lodge cookware, a Viking mixer and Krispy Kreme gift cards -- a prize pack worth $1,700!"
It's hard to imagine that there was a time when meaningless news like this actually got investors excited about Krispy Kreme. But now the hype has been exposed as very similar to the company's famous donuts: very sweet, but full of empty weight and lacking in substance.
With a market cap of $226 million and concerns about the company's viability and balance sheet, KKD shares still don't look appealing.
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