The Street Isn't Convinced B-Dubs' Proxy Battle With Marcato Will End In A Win-Win

Deutsche Bank analyst Brett Levy reiterated a Buy rating on Buffalo Wild Wings BWLD with a price target of $180. The analyst elaborated on the long, ongoing proxy war between the company and activist investor Marcato Capital Management.

On Wednesday, Institutional Shareholder Services recommended that investors support two of Marcato’s three board candidates, to be voted on at the upcoming annual shareholders meeting on June 2.

“We believe the news creates a potentially more favorable outcome for the dissident investor’s board slate as the independent proxy does create a greater likelihood shareholders follow their views,” said Levy in a note.

ISS also noted a need for greater change and accountability among management, citing recent weaker operating and share performance.

What's Happened Recently?

    1. An SEC filing revealed that Marcato now has a 9.9 percent stake in Buffalo Wild Wings.
    2. Shares declined about 10 percent after speculation that Marcato’s new option protection plan was the activist’s potential exit strategy.
    3. Shares rallied over 8 percent after ISS released its report supporting Marcato’s board nominees.

“It has become increasingly more evident that the investment community is becoming more favorable on the idea of external change,” said Levy.

Mixed Opinions

Deutsche Bank continues to recommend buying Buffalo Wild Wings shares — regardless of which side wins the vote — but previously cautioned investors that there are no guarantees of a clear outcome following the shareholder meeting.

Levy made a point though, of noting that the Street doesn’t seem to view the proxy war as a win-win situation, “as evidenced by client feedback and the recent share price moves.”

At last check, shares of Buffalo Wild Wings were down 1.22 percent at $156.90.

Related Links:

Purchase Intent Data Shows Buffalo Wild Wings Could Be In Trouble

The Buffalo Wild Wings-Marcato Proxy War, Explained
Posted In: Analyst ColorLong IdeasNewsHedge FundsPreviewsReiterationRestaurantsManagementAnalyst RatingsTrading IdeasGeneralBrett LevyDeutsche BankInstitutional Shareholder ServicseISS
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