Is Sonic Still Stalled After Mixed Q4?

As such, the firm reiterated its rating on Sonic at Hold but nudged up its price target from $24 to $25.

At time of writing, shares of Sonic were up 3.71 percent at $25.72.

Analyst Lynne Collier termed Sonic's results as mixed, with comps falling short, while the adjusted earnings per share exceeded estimates. The analyst attributed the earnings upside to a better restaurant-level margin (see Collier's track record here).

While noting that comps fell 3.3 percent compared to the consensus estimate of a 1.5 percent drop, Canaccord Genuity said the shortfall was due to unfavorable weather, a competitive QSR environment and production promotions that were below expectations.

With the management guiding for 5-10 percent earnings growth for fiscal year 2018, the firm maintains its earnings estimate for FY18 at $1.33 per share.

Giving the key takeaways from Sonic's earnings call, the firm said underlying sales trends have improved in the first quarter. The company sees modest commodity cost inflation in 2018, while it increased its targeted leverage ratio to repurchase shares.

Citing the call, the firm also said that advertising changes, as well as menu refinements, are underway.

"While we are encouraged that the company's new value messaging ($2.99 carhop classic) is resonating and underlying SSS have improved thus far in Q1, we look for greater evidence of sustainability before becoming more constructive on shares," the firm added.