Barclays Starts Wingstop At Equal-Weight, Says Valuation Keeps It Cautious

In a report published Tuesday, Barclays analyst Jeffrey A. Bernstein initiated coverage of Wingstop, Inc. WING with an Equal Weight rating and price target of $25. The analyst believes that the stock offers "industry leading" fundamentals, driven by double digit comp and unit growth for the past three years. Given that the stock valuation has risen 46 percent since its IPO on June 12, the analyst expressed concern, saying that every few IPOs in recent times have been able to sustain such high valuation levels. However, the analyst also believes that Wingstop's fundamentals are "intriguing," given the "trio of comp, unit & franchise mix." At the same time, the analyst also mentioned that among the key revenue driver for the company, "comps are more volatile, as franchise demand for new unit growth is strong… Investors have questioned the modest long-term comp guidance, though we believe it is prudently conservative." The company has guided to 13-15 percent EBITDA growth, with 18-20 percent net income growth, for the year.