Following the released figures, Wedbush said Habit's outlook for 2016 could prove to be conservative, given easing comparisons and management execution.
The second quarter EPS came in at $0.09 (a penny below the consensus) on 4 percent co-owned SSS growth versus the consensus of 2.9 percent, which resulted in the company cutting its 2016 SSS growth forecast to 2.0–2.5 percent from 3 percent, citing industry-wide softness during the month of July. However, it retained the unit-level margin outlook of 20.6–21.1 percent.
"We believe the lowered 2H:16 hurdle could prove conservative given easing comparisons starting in September, contributions from successful LTOs, and a track record of management executing against low-hanging marketing fruit," analyst Nick Setyan wrote in a note.
Meanwhile, the analyst expects less pressure on the mix despite pricing is expected to fall 3 percent per quarter from about 6 percent in the first half.
In addition, Setyan, who has an Outperform rating on the stock, sees additional upside from the opening of 29–31 new units in 2016.
However, the analyst cut his 2016 EPS estimate to $0.29 from $0.32 to reflect the second quarter results and guidance commentary. Setyan also trimmed his 2017 EPS estimate to $0.33 from $0.37. Consensus calls for earnings of $0.32 a share for 2016 and $0.38 a share for 2017.
Setyan also cut the price target on the stock to $21 from $25, while the shares of Habit Restaurants closed Wednesday's regular trading at $16.01.
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