The shares of Dutch Bros Premarket prices for Inc (NYSE) fell almost 40% Thursday, following a company’s weaker than expected FY guidance.

BROS Q1 revenue was $152.2 millions, exceeding consensus estimates of $145.9million. In the same period, adjusted EBITDA fell to $9.66 million from the analysts consensus of $12.8million.

Total revenue for the fiscal year will range from $700 to $715 millions, which is below analyst expectations of $717.2million. BROS anticipates FY adjusted EBITDA at minimum $90 million. This is down from the $115-$120 million range that it previously forecasted, and analysts had expected $108.1 million.

“Our substantial top-line revenue growth of 54% was primarily driven by the 107 company-operated shops opened over the past twelve months, a 56% increase, including 34 during the first quarter, and same shop sales of 6.0%,” the company said.

BROS also said it expects to open “at least” 130 new shops in 2022.

Stifel analyst Chris O’Cull downgraded to Hold from Buy with a $30.00 per share price target (down from $70.00) as he laments the lack of margin visibility.

“It’s unclear to us why SRS has slowed. Although the company mentioned macro-related issues such as higher gas prices, the 3 year stack appeared to be stable in April relative the 1Q. However, it is possible that the comparisons are more difficult. Regardless, the management remains cautious about SRS’s outlook. The concern we have is that weaker SRS performance could cause menu prices to rise in an effort to alleviate margin pressure. Shop-level EBITDA margins fell to 840bps during 1Q, and they will continue to be under pressure for the next six month. Consequently, we prefer to move to the sidelines until we gain confidence in the stability of EBITDA growth,” O’Cull said.

BofA analyst Sara Senatore lowered the price target from $80.00 to $64.00 per shares, but still rated Buy.

“While the stock came under intense pressure AMC, we believe at least part of the disappointment was a function of mis-steps by a newly public company (e.g., failing to communicate G&A expectations)… Given how much of the stock’s value rests in the long term store growth potential – which is unchanged – we view the current sell-off as an enhanced buying opportunity,” Senatore told clients.

By Senad Karaahmetovic