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Buffalo Wild Wings' (NASDAQ: BWLD) wounded restaurant chain got upgraded by an analyst Wednesday, who said the record current U.S. corn harvest should send chicken-wing costs fluttering down.
The Minneapolis-based company's shares are off more than 20 percent from the early summer high on rising wing prices that amount to nearly a quarter of the company's costs.
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Miller Tabak's Stephen Miller thinks that cost pressure will soon ease and he boosted Buffalo to Buy, from Hold, and raised his target more than 6 percent to $170 per share.
Spot market wing prices are up 25 percent since November and Miller attributes half that increase to McDonald's Corporation's (NYSE: MCD) now flopped Mighty Wings product promotion.
Although bone-in wing costs rise an average of 27 percent each year between the start of the National Football League's preseason games and the Super Bowl, Miller thinks Mighty Wing's demise and the current four-year low price for chicken feed will counter the historical trend.
Moreover, "egg sets and chick placements" increased by 2 percent to 4 percent recently, versus zero to 2 percent average of the past year, according to Miller, who cited the U.S. Department of Agriculture.
With U.S. farmers set to harvest 14.4 billion bushels of corn amid autumn weather forecasts calling for benign conditions, Miller sees the potential for even cheaper chicken feed.
"Historically chicken prices have moved with a six-month lag to corn prices," Miller said. "So we expect bone-in wings to follow suit."
Miller said this, along with same-store sales growth in the "mid single-digits" plus a growing number of stores and a small contribution from the company's emerging pizza and taco restaurants, could help shares "rebound to at least the 2014 high" of more than $167 per share.
Buffalo WIngs gained 2.4 percent Wednesday afternoon, trading at $136.10 per share.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.