Wunderlich Is Lowering Panera Bread Estimates

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

, with a price target of $185, after the company reported lackluster 1Q results. Panera reported its adjusted EPS at $1.41, short of expectations due to lower-than-expected revenues and higher spending. In the report Wunderlich noted, "We have reduced our EPS estimates to reflect additional costs associated with restaging the company for its next phase of growth. Those costs, designed to support improving customer convenience and SSS aided by its Panera 2.0 initiative, are helping build the infrastructure needed to support better sales in future years." The EPS estimates for 2015, 2016 and 2017 have been reduced from $6.35 to $6.00, from $7.00 to $6.40 and from $8.00 to $7.60, respectively. The Panera 2.0 initiative includes digital access and operational capabilities, designed to make Panera "a better competitive alternative with expanded opportunities (incl. delivery) for growth." While the rollout of the 2.0 program involves a high cost to build, implement, support, and execute, "sales have begun to grow," the analysts stated.