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BJ's shares fall on 2Q miss

The Associated Press

BJ's Restaurants Inc.'s shares fell Thursday after the restaurant chain reported weaker-than-expected revenue and profit for its second quarter.

THE SPARK: The company said Wednesday that its second-quarter net income fell 4 percent to earned $8.6 million, or 30 cents per share. Adjusted profit was a penny shy of Wall Street expectations. Revenue rose 10 percent to $198.5 million, but analysts polled by FactSet expected $202.5 million.

Higher costs weighed on profit, and revenue from its restaurants open at least a year was flat. This is considered a key measure of a retailer's health, because it excludes revenue at stores that recently opened or closed.

THE BIG PICTURE: BJ's, which is based in Huntington Beach, Calif., runs 136 restaurants in 15 states. It says it's on track to open 17 new locations this fiscal year.

THE ANALYSIS: Several analysts lowered price targets on the company, and Roth Capital Partner's Anton Brenner downgraded BJ's to "Neutral" from "Buy" while cutting his earnings estimates for the year.

While Sterne Agee's Lynne Collier lowered her price target to $40 from $44, she remained optimistic, maintaining a "Buy" rating on the shares. She lowered her earnings estimates through next year, but said BJ's sales trends should still come out better than the overall industry's.

SHARE ACTION: Shares fell $4.34, or 12 percent, to $31.30 in afternoon trading. The company's stock is dropping near the lower end of its 52-week trading range of $28.94 to $45.63.