Restaurant
companies are set to report their fourth-quarter financial results in challenging industry conditions dominated by tough
competition and continued weakness in Texas, which in turn are weighing on same-store sales.
Favorites
Wedbush said it continues to favor Jack in the Box Inc. (NASDAQ: JACK) most due to the confidence in management’s ability to meet or exceed EPS
expectations in a muted sales environment. Analyst Nick Setyan sees refranchising, G&A opportunities and share repurchases as
drivers of EPS in-line to above guidance.
Setyan also favors Starbucks Corporation (NASDAQ: SBUX) and Del Taco Restaurants Inc (NASDAQ: TACO) given their defensive nature with de-risked near-term top lines and
medium-term comp and margin drivers.
Out Of Favor
On the flip side, the analyst is incrementally cautious on Panera Bread Co (NASDAQ: PNRA), citing unfavorable risk/reward and heightened expectations of strong
go-forward comps.
“Based on our checks, we no longer believe go forward expectations are as safe,” Setyan wrote in a note.
In addition, Setyan expects a disappointing print and weak 2017
outlook from both BJ's Restaurants, Inc. (NASDAQ: BJRI) and Buffalo Wild Wings (NASDAQ: BWLD). Further, he sees Shake Shack Inc (NYSE: SHAK)’s comps and AUVs to be pressured ahead of current expectations, leading to
disappointing EBITDA growth.
For Chipotle Mexican Grill, Inc. (NYSE: CMG), the analyst predicts below consensus results, with margins likely to remain
under pressure in 2017. That said, Wedbush believes Chipotle’s focus on margins at current sales run rates is poised to benefit
2018.
Sidelined
Meanwhile, Setyan remains on sidelines on Wendys Co (NASDAQ: WEN), saying increased visibility into fundamental drivers of EBITDA growth
reacceleration in 2017 and beyond is necessary for further multiple expansion.
Ratings And Price Targets
Following are the ratings and price target of various restaurant stocks covered by Wedbush:
|
Company
|
Rating
|
Price Target
|
|
BJ's Restaurants
|
Underperform
|
$31.50
|
|
Buffalo Wild Wings
|
Neutral
|
$155.00
|
|
Chuy's Holdings Inc (NASDAQ: CHUY)
|
Outperform
|
$31.00
|
|
Chipotle Mexican Grill
|
Neutral
|
$400.00
|
| Del Taco |
Outperform |
$17.00 |
|
Denny's Corporation (NASDAQ: DENN)
|
Outperform
|
$14.00
|
|
Dunkin Brands Group Inc (NASDAQ: DNKN)
|
Neutral
|
$49.00
|
|
Fiesta Restaurant Group Inc (NASDAQ: FRGI)
|
Outperform
|
$32
|
|
Habit Restaurants Inc (NASDAQ: HABT)
|
Outperform
|
$20.00
|
|
Kona Grill Inc (NASDAQ: KONA)
|
Outperform
|
$12.00
|
|
Noodles & Co (NASDAQ: NDLS)
|
Neutral
|
$4.50
|
|
Popeyes Louisiana Kitchen Inc (NASDAQ: PLKI)
|
Outperform
|
$72.00
|
|
Panera Bread
|
Neutral
|
$220.00
|
|
Shake Shack
|
Underperform
|
$30.00
|
|
Wendy's
|
Neutral
|
$14.00
|
|
Wingstop Inc (NASDAQ: WING)
|
Outperform
|
$36.00
|
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