What Happened?

A number of stocks jumped in the afternoon session after analysts at Bernstein highlighted a potential recovery for the sector in 2026. After a challenging 2025 marked by weakened consumer confidence, the firm anticipates a gradual traffic recovery. 

Several factors could stimulate consumer demand, including an upcoming Tax Bill and the U.S.-hosted Soccer World Cup, with effects potentially starting in the spring. This optimistic outlook was supported by restaurant valuations hitting 10-year lows, suggesting significant upside if consumer spending data improves. Following a period where households cut back on dining out due to inflation, larger tax rebate checks are also seen as a potential catalyst for a rebound in casual dining.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Traditional Fast Food company Dutch Bros (NYSE: BROS) jumped 5.8%. Is now the time to buy Dutch Bros? Access our full analysis report here, it’s free for active Edge members.
• Sit-Down Dining company BJ's (NASDAQ: BJRI) jumped 4.5%. Is now the time to buy BJ's? Access our full analysis report here, it’s free for active Edge members.
• Traditional Fast Food company El Pollo Loco (NASDAQ: LOCO) jumped 2.8%. Is now the time to buy El Pollo Loco? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Dutch Bros (BROS)

Dutch Bros’s shares are very volatile and have had 29 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 19 days ago when the stock gained 4.3% on the news that KeyBanc initiated coverage on the stock with an 'Overweight' rating, and the company opened its first store in Los Angeles. Analyst Eric Gonzalez from KeyBanc set a price target of $77.00. An 'Overweight' rating generally suggested that the analyst believed the stock would perform better than the average return of the stocks that the analyst covers.

Dutch Bros is up 1.7% since the beginning of the year, but at $63.24 per share, it is still trading 25.9% below its 52-week high of $85.37 from February 2025. Investors who bought $1,000 worth of Dutch Bros’s shares at the IPO in September 2021 would now be looking at an investment worth $1,724.

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