11:57 AM EST, 11/05/2024 (MT Newswires) -- Krispy Kreme's (DNUT) expanded US partnership with McDonald's (MCD) is expected to serve as a catalyst that will support the former's expansion strategy, Morgan Stanley said in a Tuesday note.

The expanded partnership was announced in May, with the companies targeting a phased market rollout that will bring Krispy Kreme's most popular doughnuts to participating McDonald's branches by the end of 2026.

According to Morgan Stanley, the partnership could accelerate Krispy Kreme's "delivered fresh daily" or DFD door expansion, adding about 12,000 McDonald's locations to the network through 2026. The investment firm estimated that an addition of 1bout 14,000 DFD doors by the end of 2026 would add approximately $270 million of DFD revenue that year and $370 million in 2027.

Morgan Stanley also noted potential risks associated to the planned expansion, such as the expenses and investments to support the DFD growth and the possibility of "underwhelming" results from the McDonald's partnership.

Morgan Stanley resumed coverage on Krispy Kreme, with an equal-weight rating and a $14 price target.

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