Cowen Upgrades Panera, Says It Can 'Make Some Dough'

In a report published Tuesday, Cowen and Company analysts upgraded the rating on

from Market Perform to Outperform. The price target was raised from $172 to $210. The analysts believe that there is limited downside to the stock. "We expect PNRA to be more efficient with spending while the increased sales impact from 2.0 as well as non-2.0 initiatives leverage costs to help stabilize EPS in the back half of 2015, and progressively grow in 2016-17," the report stated. The analysts expect a progressive improvement in the company's comps as more stores complete the three-quarter mark of having converted to 2.0 and begin to see strong sales growth as a result of this initiative. In addition, the new marketing campaign, scheduled to begin in June, is likely to also offer support for Panera Bread's other initiatives. The analysts also expressed their confidence in the company's focus on controlling spending, as demonstrated in the way costs were controlled via "the select rollout of table delivery during 2.0 conversions… the hiring of a technology consultant for more efficient IT spending, and plans to refranchise 50-150 underperforming cafes in 2015 that will be accretive to op. income." In addition, with the management now more focused on shareholder returns, the stock is likely to have downside protection.