Panera Still A 'Top Pick' At Barclays, But Why?

In a report published Wednesday, Barclays analysts maintained an Overweight rating on

, with a price target of $200. Panera reported its 1Q results modestly short of expectations while reiterating its 2015 guidance. The company's adjusted EPS came in at $1.41 and revenue growth at 7 percent, short of Barclays estimates. "The most significant deltas versus our forecast were higher food costs (reducing EPS by $0.05), offset by lower fresh dough costs (benefitting EPS by $0.06). Operating margins were 9.3%, -180bp y-y, similar to our forecast. Below the line, lower interest expense was offset by higher income tax expense relative to our estimates," the analysts mentioned. The company has guided to a flat to down mid-to-high-single-digit EPS pressured by 2.0 rollout costs, and now inclusive of strategic initiatives. The EPS estimate for FY15 has been raised from $6.13 to $6.15. The company's medium to long-term EPS growth is expected to be driven by its broader brand turnaround initiatives. The analysts believe that in the short-term the recently announced strategic initiatives would provide earnings and valuation support. "And importantly, such will bridge the gap to a time when PNRA 2.0 efforts support a re-acceleration in fundamental trends," the report added.