JPMorgan Sets $16 Price Target On Fogo De Chao

Fogo De Chao Inc FOGO reported its 1Q16 results, with the EPS slightly below the estimate.

JPMorgan’s John Ivankoe downgraded the rating on the company from Overweight to Neutral, while lowering the price target from $20 to $16.

1Q Results

Fogo De Chao’s 1Q16 adjusted EPS came in at $0.21, below the estimate and marginally lower than the EPS reported for 1Q15, driven by “a revenue shortfall as well as higher opex and slightly higher labor,” Ivankoe mentioned.

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The revenue shortfall and higher opex were due to lower-than-anticipated new unit volumes and a decline in consolidated comps.

U.S. comps stood at 0.9 percent, and Brazil comps at 2.3 percent for the quarter, with the U.S. and consolidated comps missing the estimates.

“A significant weakening in new unit volumes as well as negative mix of 4.8 percent calls into question our previous F17 earnings expectations,” Ivankoe stated.

The EPS estimates for FY16 and FY17 have been lowered from $0.98 to $0.93 and from $1.12 to $1.01, respectively.