Market Overview

Cost Initiatives May Not Be Enough To Drive Upside For BJ's Restaurants

Share:

Shares of BJ's Restaurants, Inc. (NASDAQ: BJRI) fell to a new 52-week low of $32.24 after reporting lower-than-expected third quarter results. Meanwhile, Wedbush sees risk to high Street estimates and lowered its estimates and price target, as it believes cost savings alone may not be enough to drive upside.

The company’s third quarter EPS of $0.30 was below $0.33 consensus on -3.4 percent same-store sales growth versus -1.9 percent consensus view.

“Given our expectation for muted SSS growth trends and a declining marginal benefit from ongoing cost initiatives, we believe risk to stubbornly high consensus estimates remains,” analyst Nick Setyan wrote in a note.

In addition, Setyan is skeptical of the company’s said same-store sale drivers including “value deals, targeted loyalty offerings, select promotional days, continued digital and mobile app adoption, and higher advertising spend.”

The analyst, who has a Neutral rating on the stock, favors curtailing medium-term unit growth to focus on margins and cash flows and not expecting cost initiatives to boost margins without an improvement in same-store sales trends.

Accordingly, Setyan cut his 2016 EPS estimate to $1.72 from $1.74 and 2017 EPS estimate to $1.94 from $2.07. The analyst also cut his price target on the stock by $6 to $34.

At time of writing, shares of BJ's Restaurants fell 5.30 percent to $33.80.

Latest Ratings for BJRI

DateFirmActionFromTo
Jul 2019MaintainsNeutral
Jul 2019MaintainsBuy
Jul 2019MaintainsBuy

View More Analyst Ratings for BJRI
View the Latest Analyst Ratings

Posted-In: Nick Setyan Wedbush SecuritiesAnalyst Color Price Target Reiteration Analyst Ratings

 

Related Articles (BJRI)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
MSGNDowngrades
HUBBInitiates Coverage On160.0
CTREUpgrades25.0
GLNGMaintains27.0
SEMaintains45.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Oil And Equities: Recent Correlation Worth Watching To See If It Lasts

Tesla's 'Overly Hyped' Product Update Presents A Mobileye Pair Trade Opportunity