UPDATE: Bank of America Maintains Underperform on Country Style, But Slightly Raises PO

In a report published Tuesday, Bank of America maintained its Underperform rating on Country Style Cooking Restaurant Chain Co., Ltd. CCSC, but slightly increased its price objective from $7.35 to $7.80. Bank of America noted, "CCSC 3Q12 GAAP and pro-forma (ex. option expense) net profit surged 117%/95% year over year. Stringent cost control started to benefit profit growth, while earnings growth is not of high quality considering weakening SSSG and contribution from below-line items. We raise 2012/13E estimates 22%/21%, and raise PO to US$7.8. After the 22% rally since October, the stock trades at 21x average 2012/13E P/E, which has largely priced in the short term earnings rebound, in our view. Our target PO derived from blended DCF and PE valuations, an implied 17x 2013E PE or 0.3x PEG based on CAGR over 2011-14E." Country Style closed at $8.07 on Monday.