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Jack in the Box Price Target Lowered at Stifel Due to Margin Pressure

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By Sam Boughedda

Investing.com -- Fast food restaurant chain Jack in the Box Inc (NASDAQ:JACK) had its price target cut to $80 from $100 by Stifel analyst Chris O'Cull on Friday.

In a note to investors, the analyst, who maintained a Hold rating on the shares, said they are updating their model following the company's earnings report. The company missed profit forecasts but beat revenue estimates when it reported before the open on Tuesday.

"We expected the company to weather similar levels of inflationary pressure as its industry peers, but we were surprised by the magnitude of margin compression—exacerbated by recently acquired stores in underperforming markets—and its anticipated impact on FY22 earnings," wrote O'Cull.

The analyst expects pricing for the year to be in the high single digits, the upper end of the previous range, with rapidly-implemented staffing initiatives in company stores to be extended to the franchise system to address labor shortages.

"In light of the ongoing margin pressure, we reduced our FY22 EPS to $6.10 (from $7.00)," he concluded.

Jack in the Box shares fell 2.66% Friday, adding to Thursday's almost 3% decline.

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