Sonic Corp.'s shares fell Monday after PiperJaffray analysts downgraded the drive-in restaurant.
THE SPARK: PiperJaffray analysts Nicole Miller Regan and Joshua Long downgraded Sonic's shares from "Overweight" to "Neutral". They said in a research note that they are confident in the company's turnaround efforts, but they think its shares are fully valued at current levels.
THE BIG PICTURE: Sonic had previously struggled to grow its business due to soft sales. It added new products, improved its marketing and fine-tuned pricing to draw more customers to its restaurants.
Investors noticed the improvements and Sonic's stock price rose since the beginning of the year. But Regan and Long say that there's little more value left in the stock.
THE ANALYSIS: The company's recovery is still on track but its shares are fairly priced, the analysts said. They expect a turning point when Sonic adds more restaurants and the company's margins and earnings improve.
Regan and Long have an $11 price target on Sonic shares.
SHARE ACTION: Sonic shares are up 56 percent since the start of the year. They fell 41 cents, or 3.9 percent, to $10.09 in afternoon trading. They have ranged between $6.35 and $11.34 in the past 52 weeks.