MKM: Bloomin' Brands Optimism May Increase With This Activist Investor Taking A Stake

A filing by Jana Partners LLC on Friday afternoon indicated that the activist investor had taken a stake in Bloomin' Brands Inc BLMN.

While Bloomin' Brands is still in the early stages of addressing operational, strategic and competitive issues, Jana Partners’ acquisition of a stake indicates a possible recovery at the company and could boost its share price, according to MKM Partners.

The Analyst

MKM Partners’ Brett Levy maintained a Buy rating on Bloomin' Brands while keeping the price target unchanged at $20.

The Thesis

Skepticism around Bloomin' Brands’ potential has kept the shares undervalued for years and continues to be an investor concern, Levy said in the note.

He added, however, that investors like Jana Partners take a stake in a company not only because they consider the target's stock as an “attractive investment opportunity” but also to have discussions with management around strategic, operational and leadership issues.

Bloomin' Brands has several areas in which it can improve, according to the analyst, including competitive positioning, growth in sales and profit, technology and data adoption and portfolio management.

Levy pointed out that Jana Partners' prior investment cycle had helped in bringing about changes in the company.

The activist investor’s discussions with management could result in “a greater sense of urgency in executing the company's current plans,” which would benefit investors in the near term, the analyst wrote.

If, on the other hand, the discussions result in the current plan being modified, it would give Bloomin' Brands more time to implement changes.

Levy also said that if structural and strategic changes do take place it could result in better fundamentals and an improved operating structure and portfolio.

Price Action

Shares of Bloomin' Brands are up 1.55% to $18.32.

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