UPDATE: Wells Fargo Upgrades Chuy's

Wells Fargo on Thursday upgraded Chuy's Holdings Inc CHUY from Market Perform to Outperform.

Analysts at Wells Fargo wrote, “CHUY's discounted valuation overstates the potential impact that new unit development miscues (specifically the class of 2013) could have on future operating cash flow and unit development… We believe CHUY's decision to increase its unit development focus on more densely penetrated markets will result in both improved new unit productivity trends and more modest/shorter-duration new restaurant inefficiencies.”

Chuy's is trading at 11.3x 2015 EBITDA, which is a discount to the top-15 growth restaurants according to same-store sales growth. Wells Fargo raised their price target to $25-26, from $22-23, due to strong future unit development prospects.

Shares of Chuy's traded recently at $20.82, up 4.3 percent.