Morgan Stanley raised its price target on Jack in the Box Inc. JACK Monday from $71 to $74 and maintained an Equal-weight rating after the company reported Q4 earnings.
Analysts led by John Glass noted that “we are adjusting our FY15 EPS estimate down to $2.82, from $2.90, due primarily to higher pension expenses and within guidance of $2.73-2.88.
"We are decreasing our FY15 system SSS estimate at JIB to 2.2 percent, from 2.6 percent, and are increasing our Qdoba system SSS estimate to 5 percent, from 3.3 percent.
"We are increasing our FY15 restaurant-level margin estimate to 19.3 percent, from 18.6 percent, in line with guidance of 18.8-19.6 percent.”
Glass concluded, “With the recovery in Qdoba's fundamentals (FY14 system SSS of 6 percent vs. 0.8 percent in FY13), a SOTP valuation methodology has become more relevant. In our analysis, we put a 11x EV/EBITDA multiple on the JIB business (in line with slow-growing domestic QSR peers like WEN and SONC) and an 18x multiple on the Qdoba business (a discount to CMG's 19x, but roughly in line with fast casual peers).”
Jack in the Box Inc. recently traded at $74.51, unchanged.
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