Potential B-Dubs Investor? It Might Be Worth Waiting For 'Deeper Pullback'
Buffalo Wild Wings (NASDAQ: BWLD) shares have gained 24 percent over the past three months, trading above the $200 mark on September 15.
Maxim Group’s Stephen Anderson initiated coverage of the company with a Hold rating and a price target of $217.
Despite several positives at the company, Anderson recommends waiting for a “more pronounced pullback,” following the recent pressure on the shares.
Analyst Stephen Anderson believes that the Buffalo Wild Wings concept continues to be “underpenetrated in most markets” and the company has to potential to expand without cannibalizing sales at other locations. He projects Buffalo Wild Wings’ presence in North America to expand from the current 1,100 units to 1,900 by 2022.
“Specifically, we believe that a mix of value pricing and promotional items will support sustained comps in the mid-single-digit range,” Anderson wrote. Comp growth may be supported in the near term by a revamped lunch program and a strong 2016 sports schedule.
Buffalo Wild Wings has a remodeling program underway. This, along with table-based ordering via tablets and a new loyalty program, could help the company generate sustained comp growth in 2016 and 2017.
Anderson also expected the company to benefit from a decline in commodity costs, particularly for chicken wings, over the next 12 months. “We expect BWLD to focus increasingly on shareholder returns, potentially culminating in a share buyback program,” the Maxim Group report noted.
Anderson projected 20-25 percent EPS growth in 2016, backed by “the combination of mid-single-digit same-restaurant sales growth, solid unit expansion, a retreat in food costs led by a drop in average wing costs, and reduced operating costs as a percentage of sales.” He believes that the company would be able to sustain 20 percent EPS growth in the following year.
“However, in light of the jump in the share price following a lackluster 2Q15 (June) earnings report, we prefer to wait for a more pronounced pullback before recommending BWLD shares,” the analyst added.
Latest Ratings for BWLD
Aug 2015 | Oppenheimer | Upgrades | Perform | Outperform |
Jul 2015 | Credit Suisse | Maintains | Underperform | |
Jul 2015 | Deutsche Bank | Maintains | Hold |
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