- Following the troughs seen in May and June, the share price of Buffalo Wild Wings BWLD has risen almost 24 percent since July.
- Credit Suisse’s Jason West has maintained an Underperform rating and price target of $170 on Buffalo Wild Wings.
- Although the management appeared confident during the recent investor day, West sees potential short-term risks for the stock.
Following the recent investor event hosted by CEO Sally Smith and IR head Heather Pribyl, West stated that he was impressed by the company’s strategic positioning.
According to the Credit Suisse report, “The focus on the sports bar experience, as opposed to traditional casual dining, has allowed BWLD to dramatically outperform the peer group on most metrics in recent years, particularly SSS.”
West expects this differentiation to also help the company navigate the expected labor cost headwinds better than many of its peers through its sales leverage and pricing power. The management also appeared confident regarding near term sales trends.
However, potential short-term risks for Buffalo Wild Wings could include the initial 2016 guidance, which West expects to come in below the consensus expectations, along with “potential return of Avian flu this fall/winter, difficult 1Q compares, and a core concept that is increasingly approaching saturation.”
Apart from rising labor costs, West said that the company’s new store development was “heavily weighted to higher-cost markets,” such as the west coast and the northeast, where labor costs could be a particular concern.
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