Raymond James Upgrades Buffalo Wild Wings, Chicken Prices Predicted To Normalize In 2016

In a report published Tuesday, Raymond James analyst Brian M. Vaccaro upgraded the rating on

from Market Perform to Outperform, while establishing a price target of $195, saying that the near-term issues were "well known" and there was confidence in the company's 2016 performance. Buffalo Wild Wings' 2Q earnings season could be "noisy," analyst Brian Vaccaro said. The company is expected to report EPS at $1.28, $0.01 short of the Street consensus. Total revenue is estimated at $424.1 million, representing comps of +3.0 percent at company units and +2.0 percent at franchise units. Comps are likely to have slowed during the quarter due to tougher World Cup comps. In the report Raymond James noted, "…we believe these risks are well-known by most investors and largely discounted in the stock's EV/EBITDA valuation." Vaccaro expects chicken wing costs to have remained high, entering the peak demand season during fall/winter this year. This puts management's 2015 guidance "at risk." The current high prices should "begin to normalize on increased chicken production later this year and into 2016," Vaccaro added. Even if the consensus expectations for 2015 are lowered, the 2016 expectations may remain "relatively unchanged," the report said, while adding that this should "support investor confidence and allow the stock's discount valuation to narrow further."