Some habits can’t be broken — even amid competitive threats from McDonald’s Corporation MCD or Shake Shack Inc SHAK.
Habit Restaurant Inc HABT earned the endorsement of Maxim Wednesday in light of potential changes to the fast-casual burger chain climate.
Analyst Stephen Anderson initiated coverage of Habit with a Buy rating and $13 price target.
Maxim has “cautious optimism” that Habit will stabilize comps in 2018 after three years of competition-driven deceleration, Anderson said. (See Anderson's track record here.)
The firm’s focus on value deals and convenience, including drive-thru units and online sales, are seen to improve same store performance amid “a shakeout among fast casual burger peers.”
At the same time, anticipated expansion into lower-cost markets across the Rockies and Southeast could drive mid-teen revenue growth, and lower meat costs and a stall in wage inflation could widen margins, the analyst said.
Habit could also profit from proposed government activity, according to Maxim.
“We estimate passage of corporate tax reform at the federal level could boost EPS by as much as 25 percent,” Anderson said.
At the time of publication, shares were trading up 2.7 percentn at $10.06.
Photo courtesy of Habit Restaurants.
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