UPDATE: Bank of America Upgrades Sonic to Buy on May Sales

Bank of America raises its rating on Sonic

from Underperform to Buy and raises its price objective from $7.50 to $11. Bank of America comments, "We are raising our rating on Sonic shares from Underperform to Buy following impressive May quarter sales. The stock is currently trading at about a 25-30% discount to the average QSR EV to EBITDA valuation and at a 25% discount on a P/E basis. We are raising our price objective from $7.50 to $11. Our higher PO reflects targeted EV to EBITDA valuation of 8.4x our upwardly revised FY 2013 estimate and a targeted P/E of 17x our FY 2013 EPS estimate. Our targeted valuation parameters represent a discounted valuation of 15% on an EV to EBITDA basis and parity on a P/E basis versus the QSR comparables. In our view, SONC can narrow the valuation gap to peers with consistent execution." SONC closed at $8.31 on Wednesday.