Oppenheimer: Panera Buyback Not 'Thesis-Changer'

In a report published Thursday, Oppenheimer analysts maintained a Perform rating on Panera Bread Co PNRA, saying that the positive initiatives announced by the company were far from being a "thesis-changer."

Panera Bread made the following announcements:

1. More aggressive buyback, boosted by additional debt
2. A progress update on its plan to refranchise 50-150 units in 2015

In the report Oppenheimer noted, "Incremental repurchases from combination of leveraged-buyback and refranchising proceeds could add $0.65-0.70 to EPS on a clean annual basis. This includes ~$0.55 from debt and $0.10-0.15 from refranchising proceeds. With our view that operational estimates remain too high for '16, we don't anticipate this dynamic driving earnings beats."

While both these announcements (share repurchase and unit refranchising) would be EPS accretive, "we still foresee operational earnings risk to consensus through '16," the analysts said, while adding, "We would become more positive if: 1) we saw a path to a probable earnings upside case; or 2) had visibility into a more transformational refranchising strategy."