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Baird Hungry For Shares Of Wingstop Following Solid Q2

Wingstop Inc WING 15.62% shares climbed more than 12 percent after its second quarter comps/earnings topped estimates and the restaurant operator raised its 2016 revenue growth and EBITDA outlook.

The solid results led Baird reiterate its Outperform rating on the stock with a target price of $33, implying a potential upside of 25 percent over Thursday's close.

"We believe WING remains well positioned to drive healthy top-line performance against easing comparisons in 2H16, and we are optimistic that the launch of national advertising in Q1-17 can spark additional brand momentum in 2017 and beyond," analyst David Tarantino wrote in a note.

The analyst sees the increase in the 2016 target of 130-140 net unit openings as a bullish sign related to the domestic franchise development pipeline and shows the company is bucking the industry wide slowdown. Tarantino said his 2H16/2017 comps of +3 percent could be conservative.

Wingstop now projects 2016 EPS of $0.53-0.55 (+12-16 percent; consensus $0.54), while the analyst raised his 2016 EPS estimate by $0.01 to $0.54 (+14 percent).

The company also increased his EBITDA guidance was raised 1-2 percent, with management now projecting revenue +15-17 percent (up from +14-16 percent), and low-single-digit comps.

At time of writing, shares of Wingstop rose 12.77 percent to $29.67.

Jul 2016WedbushInitiates Coverage onOutperform
Apr 2016Cowen & CompanyInitiates Coverage onOutperform
Apr 2016Goldman SachsUpgradesNeutralBuy

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