News Press Releases

Buffalo Wild Wings Could See Margin Improvement As Wing Prices Track 5% Lower Than Last Year

M | August 22, 2016

BMO Capital Markets has maintained its Outperform rating on Buffalo Wild Wings (NASDAQ: BWLD) and kept a price tag of $200 on the company's stock. The brokerage believes the company stands to gain from lower-than-last-year wing prices.

On the positive catalysts, analysts Andrew Strelzik and Ryan Royce think wing prices remain deflated, dropping 2–3 percent compared to the last year. The brokerage pointed out that in the last four weeks, deflation in wing price has remained more or less consistent within the 2 and 4 percent range. This was below the 6–10 percent deflation range recorded in both June and July.

"3Q wing prices appear to be tracking below consensus estimates, implying an estimated $0.05 favorable delta to EPS (all else equal) with only 10 days of wing price exposure remaining for the quarter. Specifically, our regression analysis implies 3Q COGS percentage of 28.8 percent (relative to consensus of 29.1 percent) as we estimate BWLD's 3Q wing prices are tracking 5 percent below year-ago levels," the analysts said.

The brokerage believes the outlook for wing price remains positive beyond the third quarter, pointing out the possible quickening of deflation in the fourth quarter. The main reason being normal seasonal price growth will most likely be restricted beyond the normal circumstances.

At time of writing, Buffalo Wild Wings was relatively flat on the day, trading at $162.93, off 0.06 percent.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!