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Analyst increases rating for Panera Bread

NEW YORK (AP) -- An analyst lifted his rating for Panera Bread on Tuesday, citing its attractive stock price.

Phillip Juhan of BMO Capital Markets said in a client note that the restaurant operator's shares are down about 5 percent since BMO downgraded the stock in October. This compares with a nearly 7 percent gain by the benchmark S&P 500 index during that time.

Juhan said that Panera also appears to have a good handle on its commodity costs, and he's pleased that the company is willing to raise prices if necessary to help contend with food and health care costs.

In addition, the analyst said that Panera has no debt, $300 million in cash on its balance sheet and uses a franchise model that helps to protect investors somewhat against certain inflationary costs.

The St. Louis-based chain owns and franchises more than 1,600 bakery-cafes nationwide. Panera reported last month a 34 percent increase in fourth-quarter profit. Revenue in restaurants open at least a year, a key retail metric that strips out the skewing effect of new and closed stores, rose 5.1 percent in locations Panera owns and 4.7 percent in franchised cafes.

Juhan boosted the company's rating to "Outperform" from "Market Perform" and maintained a target price of $190.

Shares of Panera Bread Co. added 57 cents to $160.81 in afternoon trading. Over the past year, shares have traded between $135.40 and $175.26.