The difficulty companies are having in finding new workers could slow Krispy Kreme 's expansion plans, according to Truist. Analyst Bill Chappell downgraded the stock to hold from buy, saying in a note to clients Monday that the company may struggle to find delivery drivers and other workers in the current economic environment. "Acute labor shortages and wage inflation currently occurring in the US will slow the company's expansion of the company's hub and spoke model and slow top line growth over the next few quarters. We believe slowing growth will, in turn, keep the stock's valuation in check if not compress it further," the note said. Truist lowered its price target on Krispy Kreme to $15 per share from $21, implying upside of less than 7%. The restaurant chain entered the public markets through an IPO in July but has been a disappointment so far. The company priced its offering at $17 per share and, after a first-day pop, has dropped to just over $14 per share. The current situation may remind investors of Krispy Kreme's prior struggles, Truist said. "Most investors remember Krispy Kreme prior run as a public company, just 6 years ago, and how operations declined steadily for several years. While we believe the revamped model is a vast improvement, the company will need to prove that it can grow at a high rate for an extended period of time before it can be viewed as a growth company and fully shake off its historical baggage," the note said. Shares fell 2.8% in premarket trading Monday. — CNBC's Michael Bloom contributed to this report.
An employee wearing a protective mask removes a doughnut from a production line inside a Krispy Kreme Doughnuts Inc. store in the Times Square neighborhood of New York, on Thursday, Sept. 10, 2020.
Angus Mordant | Bloomberg | Getty Images
The difficulty companies are having in finding new workers could slow Krispy Kreme's expansion plans, according to Truist.