Morgan Stanley Reviews Buffalo Wild Wings' Earnings

In a report published Wednesday, Morgan Stanley analysts maintained an Equal-Weight rating on

, while reducing the price target to $175, after the company reported its 1Q15 results. Investors are unlikely to be excited about the company's EPS recovery being backend loaded. Buffalo Wild Wings reported its 1Q EPS at $1.52, significantly short of expectations on lower sales and higher labor. The company announced strong comps for the quarter, at 7 percent, although this missed the Morgan Stanley and consensus estimates of 8.6 percent. The company guided to 2QTD comp of 4.1 percent, reflecting the negative impact of Easter falling during March Madness, and tougher comps in the coming months. The comps figures so far this year indicate that the comps for the rest of the year may remain in the 4-5 percent range. Management maintained its EPS growth guidance for the year at 18 percent, although this will be 2H weighted. "2Q EPS remains muted as labor pressure from guest experience captains likely to persist (+30bps Y/Y, will lap bulk of rollout in 3Q) and $1M in G&A shifts from 1Q into 2Q," the analysts said. This implies more than 35 percent EPS growth in 2H. "Though BWLD's 18% guidance seemed conservative when it was first provided in Oct '13, after 1Q's miss, it feels more appropriate, and we model closer to 17% growth. Consensus estimates, which assume north of 20+% growth, likely come down," the analysts added. The report mentioned that in the longer term, Buffalo Wild Wings "remains one of few consistent share gainers in casual dining and longer term business remains attractive." The EPS estimates for FY15 and FY16 have been reduced from $5.81 to $5.80 to reflect lower comps and higher labor in 2Q15 and from $7.10 to $7.00 on higher food and labor costs.