Miller Tabak Reiterates Hold Rating, $84 PT on Buffalo Wild Wings After Weak 4Q12 Earnings
In a report published Wednesday, Miller Tabak reiterated its Hold rating and $84.00 price target on Buffalo Wild Wings (NASDAQ: BWLD).
Miller Tabak noted, “We maintain our Hold rating and $84 fair value estimate on Buffalo Wild Wings (BWLD) following a third consecutive disappointing earnings quarter in 4Q12. Margins deteriorated once again despite stellar same-restaurant sales in the December quarter, and we now think a moderation in headline comps, stubbornly high wing costs, and a lack of leverage on the labor cost line will make it more difficult for BWLD to return to margin expansion in 2013. We argue BWLD's popularity in recent years has been bolstered by its reputation for value within the mid-scale bar-and-grill segment, but caution aggressive menu pricing will continue to be felt least through 1H13, and for this reason we are concerned about a loss in traffic. We expect BWLD shares to reverse recent gains today, but think any post-earnings decline will be limited by (1) our contention that a second concept now is likely to come sooner rather than later, thus giving BWLD another avenue for growth; and (2) the potential for a short squeeze given BWLD's industry-leading short position as a percentage of the total share float.”
Buffalo Wild Wings closed on Tuesday at $81.07.
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