Goldman Adds Buffalo Wild Wings To 'Conviction Buy' List Following Sell Off

Goldman Sachs’ Karen Holthouse maintained a Buy rating for Buffalo Wild Wings BWLD and a price target of $187. The company was added to the Conviction Buy List, as the near-term risk-reward seemed compelling.

Buffalo Wild Wings’ shares have declined by 14 percent in the past 19 days and are reaching “new valuation lows,” analyst Karen Holthouse said. She added, however, that the perceived risks related to the company’s top-line and/or wing prices seem to be either already priced in or overstated.

Near-Term

The sports calendar is likely to offset top-line concerns. Moreover, wing prices seem to be manageable. “To the extent that higher inventories/prices reflect promotional activity away from BWLD, at some point higher prices will limit this activity/demand, and stressing consensus for current spot prices still implies all-time EV/EBITDA lows,” Holthouse wrote.

Long-Term

There are several data points that supportive of “a long-term secular story,” the analyst mentioned. She mentioned these data points as “NPD still shows capacity coming out of bar & grill, BWLD’s 10K expanded on smaller market opportunity that can drive upside to 1,700 unit target, interest in Copa Americana supportive of soccer driving growing sports viewership, and cord cutting further accelerated in 2015.”