Citi Takes A Big Bite Of Carrols Restaurant: Company's 2H Should Be Solid

Citi said Carrols Restaurant Group, Inc. (NASDAQ: TAST) appears well positioned for a solid second half of 2016 after its latest Burger King franchisee checks have seen a modest improvement in trends over the last few weeks.

Carrols is the largest Burger King franchisee in the United States. Citi said the company's competitive advantages include its size, seasoned management team, extensive infrastructure, and proven operating discipline.

"As a result, we believe the company should achieve 2.7 percent SSS growth and 11.0 percent adjusted EBITDA growth over the next 3 years," analyst Catherine Lee wrote in a note.

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Lee highlighted Carrols' long-term growth opportunity from its 20-state right of first refusal to acquire Burger King stores.

In addition, Carrols should see higher profitability and sales through its operational expertise and its ongoing remodel program.

Lee, who has a Buy rating on the stock, raised FY16 EPS estimate by $0.01 to $0.50 (consensus: $0.56). The analyst also raised the target price by $0.50 to $15.50.

At the time of writing, shares of Carrols Restaurant were up 3.36 percent on the day, trading at $12.30.