BTIG Ups Jack In The Box's Price Target To $85

Jack in the Box Inc. JACK reported its 2QF16 results significantly ahead of expectations.

BTIG’s Peter Saleh maintains a Buy rating on the company, while raising the price target from $79 to $85.

Positive Trends

Saleh explained that the 2Q beat was “aided by a few less common items, though representing a nice rebound from last quarter’s disappointing results.”

The analyst believes that investors would also have been encourages by the various sales initiatives Jack in the Box plans to implement, along with the improving sales trends expected going forward.

Related Link: Jack In The Box Fears Are Overdone, Says Oppenheimer

2Q Beat

The company reported its EPS for the quarter well ahead of the estimate at $0.85, driven by better restaurant and franchise margins and lower G&A.

“Rent adjustments for refranchised units and lower mark-to-market adjustments drove about $0.08 of the upside while better restaurant margins and lower G&A accounted for the remaining $0.07,” Saleh mentioned.

Comparable sales remained flat across all segments, although comps improved in the second half of the quarter, following further price promotions.

The analyst expects the upcoming investor day to “focus on menu strategies for Jack in the Box, Qdoba’s repositioning and refranchising.”

Following the stronger-than-expected results, the EPS estimates for FY16 and FY17 have been raised.