UPDATE: Wunderlich Securities Reiterates on Sonic Following Solid Q2F14 Results

In a report published Tuesday, Wunderlich Securities analyst Robert M. Derrington reiterated a Buy rating on Sonic SONC, and raised the price target from $23.00 to $25.00. In the report, Wunderlich Securities noted, “Last night, Sonic (SONC) reported solid Q2F14 (Feb) results as EPS increased 40% to $0.07 vs. our/Street $0.06. Despite an estimated 200-300bps impact from harsh weather, sys-SSS increased 1.4% (Street 1.5%/our 2.9%) incl. company 1.3%, franch. 1.5%, contributing to 90bps lift in op. margins. Based on confidence in its plan, we project sales to accelerate in H2F14 and FY15 as the company rolls out its sales-driving technology initiatives. "Combined with its margin-building programs, we believe management has a unique drive-in franchise model poised to outperform most slower-growing fast food peers. Recently trading at a discount to its peers on CY14 EV/EBITDA (10.9x vs. 12.4x) and factoring a multiple more in line with its peer avg. at 11.5x, we are raising our target to $25 from $23.” Sonic closed on Monday at $20.92.