Jeffries: Jack in the Box Inc. Qdoba Unit's Value Not Priced In

Jack in the Box Inc.'s

Qdoba Mexican Grill unit will increase same-store sales by up to 10 percent in coming quarters and its growth prospects aren't reflected in the company's shares, an analyst said Thursday. San Diego-based Jack in the Box took a breather Thursday after hitting an all-time high earlier in the week on its third-quarter earnings and outlook. After rising nearly 50 percent in the year to date, Jack in the Box was nearly unchanged recently at $74.94 a share. "We'd be buyers," Jeffries' Alexander Slagle, adding that he expects the company's same-store sales and earnings growth to continue. Slagle raised his price target more than 12 percent Thursday to $80 a share. The company recently posted a 29 percent decline in fiscal fourth-quarter net income of $16.2 million, or 40 cents a share. But adjusted income increased 20 percent to 54 cents a share, beating expectations by a penny. Qdoba represented about $82 million of the roughly $260 in sales from company operated restaurants during the fourth quarter. Same-store sales for Qdoba are expected to grow between 8 percent and 10 percent in the first quarter, while comps for Jack in the Box restaurants are expected to increase by 1 percent to 2 percent. "Qdoba can represent a much more meaningful portion of total growth in two-to-three years," Slagle said. Wedbush's Nick Setyan maintained an Out Perform rating and raised his target slightly to $91 a share. "Qdoba is now positioned as a legitimate growth company," Setyan said, adding that the Wall Street earnings consensus for Jack in the Box is "poised for an upward revision." Wunderlich's Robert M. Derrington called recent same-store sales growth "impressive" and reiterated a Buy rating on the company, putting his $77 target under review.