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Wedbush Previews Q3 Earnings In Restaurant Group: Likes Panera And Starbucks, But Cautious On Buffalo Wild Wings And Chipotle

Wedbush Previews Q3 Earnings In Restaurant Group: Likes Panera And Starbucks, But Cautious On Buffalo Wild Wings And Chipotle
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The Market In 5 Minutes
  • Nick Setyan of Wedbush previewed the Restaurant sector ahead of operators reporting their quarterly results.
  • Setyan favors Panera Bread Co (NASDAQ: PNRA) and Starbucks Corporation (NASDAQ: SBUX).
  • Setyan is cautious on Buffalo Wild Wings (NASDAQ: BWLD) and Chipotle Mexican Grill, Inc. (NYSE: CMG).

In a report published Friday, Wedbush analyst Nick Setyan previewed the Restaurant sector and offered his top picks heading into earnings season.

Favors Panera, Starbucks

Setyan noted his recent checks at Panera (Outperform rated, $250 price target) indicated "continued 2.0 traction," with a higher number of units up double-digits year-over-year. The analyst also observed an increasing number of stores that moved their catering facilities off-site which should result in increased retail-only productivity. In addition, comp momentum likely continued into the third quarter and fourth quarter-to-date period, suggesting the company will report an in-line to above consensus comp of 3.4 percent.

Setyan is expecting Starbucks (Outperform rated, $70 price target) to show same-store sales growth momentum (mid-to-high single-digit) while his checks suggested a North America comp as high as 8 percent.

Cautious On Buffalo Wild Wings, Chipotle

Setyan stated that while he expects Buffalo Wild Wings (Neutral rated, $190 price target) to report "solid" same-store sales growth, consensus earnings per share estimates may be "tough to achieve" even with comp upside. The analyst also added that the consensus estimate is calling for 27 percent earnings per share growth in 2016 and this may be a "tough hurdle" without an incremental benefit from commodities.

Finally, Setyan is expecting Chipotle Mexican Grill (Neutral rated, $740 price target) to report an earnings per share beat given lower food costs, his checks indicated that the mid-quarter comp momentum (boosted by promotional activity) did not last in September and October. As such, the analyst warned that the company's comps "may prove disappointing" to some investors.

Latest Ratings for BWLD

Feb 2017Feltl & Co.DowngradesBuyHold
Jan 2017CLSADowngradesUnderperformSell
Jan 2017WedbushDowngradesOutperformNeutral

View More Analyst Ratings for BWLD
View the Latest Analyst Ratings

Posted-In: Food Inflation Nick Setyan restaurants WedbushAnalyst Color Restaurants Analyst Ratings General Best of Benzinga


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