Baird Sees Risk Of B-Dubs Q1 Miss

Buffalo Wild Wings BWLD is scheduled to report its 1Q results on April 26. Baird’s David E. Tarantino maintained an Outperform rating for the company, with a price target of $188.

Analyst David Tarantino expects Buffalo Wild Wings to post weak earnings given signs of softening industry trends in March, which is a high volume month for the company. He expressed optimism, however, regarding healthier comps and EPS trends emerging during the remainder of 2016.

Internal Fundamentals Remain Strong

Buffalo Wild Wings’ same-store sales tracked +0.3 percent in the first four weeks of Q1 versus +12.7 percent. Tarantino mentioned, however, “We are optimistic that BWLD's internal brand fundamentals remain healthy, with the concept likely still performing better than industry benchmarks by a fairly wide margin.”

The analyst attributed the 1Q shortfall to the broader slowdown in the casual dining segment in March, saying that it was not an internal issue. Normalization of the casual dining industry trends in the near future and expectations of Buffalo Wild Wings outperforming the industry indicate that the company could generate low-single-digit comps and robust earnings growth in Q2-Q4, which would enable it to reach the 2016 EPS guidance of +20-25 percent.

The EPS estimate for 2016 has been reduced from $1.82 to $1.70.