Panera's Comps And Earnings Expected To Improve, Says BTIG

BTIG’s Peter Saleh believes the investment Panera Bread Co PNRA is making in technology enhancements “is leading to an acceleration in traffic and same-store sales as evidenced by the increasing gap between company-owned and franchise comps.”

Saleh reiterated a Buy rating on the company, with a price target of $240.

Comps And Earnings To Improve

Although the analyst expects the company to continue to make significant investments in 2016, associated with Panera 2.0 and delivery, which might impact margins, same-store sales and earnings are expected to continue to improve throughout the year.

2Q16 Results

Panera Bread reported its 2Q16 results, with adjusted EPS of $1.78, ahead of the estimate and the consensus.

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Company-owned comparable sales grew 4.2 percent, beating the estimate, driven by growth in traffic and average check. Franchise comps grew 0.6 percent, below the estimate of 2.5 percent.

“The gap between company-owned and franchise same-store sales widened to 360 bps from 290 bps in 1Q16 as a result of investment in Panera 2.0,” Saleh explained.

2016 Guidance

Panera Bread raised its EPS guidance for 2016 from $6.52–$6.71 to $6.60–$6.70, while reaffirming the company-owned comps growth guidance of 4–5 percent, despite the industry weakness.

At time of writing, Panera was seen up 4.04 percent, trading at $216.00 shortly after Wednesday's opening bell.

Full ratings data available on Benzinga Pro.