Wunderlich Previews Panera Bread Earnings

In a report published Tuesday, Wunderlich analysts maintained a Hold rating on

, with a price target of $185. Panera Bread is scheduled to report its 1Q15 results today. The analysts expect harsh weather, stiffer comps and intense competition to have muted the company's performance in the latter half of 1Q. Higher cost of sales, labor costs and costs to support the rollout of 2.0 in G&A/D&A are expected to have restricted the EPS during the quarter. The analysts commented, "The roll-out of Panera 2.0, while expected to eventually lift sys-SSS and EPS, is likely to be dilutive to EPS in 2015 and 2016." Panera Bread intends to strengthen the support for its various initiatives by engaging a leading global technology consultant for review of its plans, adding an independent outside director and engaging more actively in constructive shareholder dialogue. Referring to the company's repurchase plan, the report mentioned, "PNRA could exhaust its $750mm repurchase plan in the next 12 months and likely reload for more repurchase thereafter. Despite that, a cost drag from rollout of 2.0 adds uncertainty to future estimates." The analysts revised their EPS forecasts to reflect the company's "shifting plan including roll-out of its Panera 2.0 initiative; planned refranchising of 50-150 co-cafes; a stepped-up repurchase program; its plan to add $500mm of LT debt; and projected fundamentals, estimated to slowly improve through 2015 and 2016." The EPS estimates for 2015 and 2016 have been reduced from $6.70 to $6.35 and from $7.70 to $7.00, respectively.