Hot Earnings, Tepid Rating; Deutsche Bank On Zoe's Kitchen

Despite praise in the name, Deutsche Bank couldn't change a Hold rating on shares of Zoe's Kitchen Inc ZOES Wednesday.

In terms of macro issues, Deutsche bank saw cautious commentary in labor, geographic and competitive market, which made it even more impressive that management was able to generate better-than-expected results.

Some of the reasons for the strong performance this quarter were in-store execution, a strong catering business, and new product introductions, Deutsche Bank's Brett Levy said.

Favorable commodities may have helped offset ongoing wage rate inflation and deleverage from immature stores, according to the analyst. Each of the 2016 guidance line-items were raised, which led to Levy increasing his price target in the stock from $35 To $37 per share.

Risks to Levy's current rating and price target include competitive landscape, real estate, consumer economic health, commodities, and labor issues.

Posted In: Analyst ColorNewsAnalyst Ratings
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