Who Are Panera's Most Logical Suitors?

Panera Bread Co PNRA may be exploring strategic alternatives, including a possible sale, after receiving takeover interest. The probability of an acquisition does not seem high, given that the stock is trading at multiples that "make the business less attractive to most non-strategic bidders,” Baird’s David E. Tarantino said in a report.

Panera’s shares have surged on takeover speculation. The shares gained 8 percent on Monday, and are now up 38 percent year-to-date, versus a 3 percent gain in the S&P 400. Tarantino downgraded the rating on the company from Outperform to Neutral, while raising the price target from $265 to $290.

Potential Acquirers

“We acknowledge that PNRA theoretically could be considered an attractive acquisition target based on the company's highly differentiated brand and prospects for robust earnings performance in upcoming years,” Tarantino wrote. He added, however, that the high multiples mak3 the company less attractive.

The analyst named privately-held JAB Holdings and Yum! Brands, Inc. YUM as the “most logical suitors,” while adding that a bid from Starbucks Corporation SBUX would be very surprising.

While expressing optimism regarding Panera’s growth prospects, Tarantino mentioned that the company had several sales drivers that provided “excellent visibility to the outlook.”

Related Links:

Domino's Not Interested In Panera A Notable Restaurant Analyst On The Likelihood Of A Panera Takeover