Stephens Just Upgraded BJ's Restaurants After Meeting With Executives

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In a report published Tuesday, Stephens analysts upgraded the rating on
BJ's Restaurants Inc
BJRI
from Equal-Weight to Overweight, while raising the price target from $55 to $58. The upgrade comes after meetings with top officials which boosted confidence in the company's long-term growth prospects. "We also feel that the market is underappreciating the Company's traffic outperformance vs. the industry, along with the average check opportunity once it laps the value initiatives from 2014," the analysts mentioned. Traffic has improved after the introduction of a new menu by the company in February 2014, rising from the 1Q14 low of -2.2 percent to 1.5 percent in 1Q15. "…We also believe that the menu reduction (184 items to ~135 as of the May '15 menu) has served to both improve food consistency, speed of service, and guest satisfaction, along with some costs out of the BOH," the analysts added. In the report Stephens noted, "…we do not expect future menu introductions to have near the level of impact that we saw in 2014 and would look for accretive check mix improvement to occur in 2Q15 and beyond. As noted above, we believe that the longer-term growth rate should be in the 2%-3% range, which incorporates 2%-2.5% of pricing and modest check growth." BJ's Restaurants continues to have superior brand and concept with continued investments in its stores, high quality of food and fast execution.
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Posted In: Analyst ColorUpgradesPrice TargetAnalyst RatingsStephens
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