J.P. Morgan Raises Price Target for Burger King (BKC, JPM)

J.P. Morgan JPM has cut its F4Q10 EPS estimate for Burger King BKC to $0.33 from $0.38. Due to lower comps and weaker margins in both the US and EMEA/APAC market, FY11 EPS estimates have also been lowered from $1.53 to $1.36. Company store margins in 3Q10 (March) dropped to 6.1% vs. the 16.7% level in 2004. Germany, which accounts for a significant portion of the company's international store base, is showing sluggish single-digit growth rates. J.P. Morgan (JPM) has also stated that it expects currency to negatively impact overall operating income by slightly more than 10% in fiscal 2011. The company’s U.S. business is showing signs of stability as 4Q10 (June) shows slightly positive traffic metrics. The company has been given a ‘Neutral’ rating with a price target of $21, up from previous target of $20.