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Credit Suisse Still 'Searching For Bottom' At B-Dubs

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Buffalo Wild Wings BWLD 12.46% reported poor 1Q EPS of $1.73, due to weak same-store-sales. Credit Suisse’s Jason West maintained an Underperform rating for the company, while reducing the price target from $142 to $120. The analyst commented that although investors had feared a comp miss, the results were “even worse than expected.”

Top Line Pressures Affecting Performance

Analyst Jason West noted that while this was Buffalo Wild Wing’s first negative quarterly comp since 4Q10, it continued the recent downward trend. The company attributed its poor performance to broad based top line pressures, partly due to casual dining segment challenges. While takeout sales were strong, lunch sales were soft.

Buffalo Wild Wings guided to flat comps for 2Q and 3Q, with a return to positive SSS by 4Q. The EPS guidance for 2016 was reduced from $5.95-$6.20 to $5.65-$5.85. Credit Suisse lowered the EPS estimates for 2016 and 2017 from $6.08 to $5.72 and from $7.45 to $6.90, respectively.

Although the stock valuation is nearing historical troughs, it does not appear to be bottoming out, West commented. He added that more clarity was required on factors leading to the SSS deceleration. The strategies announced by the company seem to be “tweaks rather than shifts,” suggesting that the worst may not be over, the analysts mentioned.

Apr 2016BarclaysMaintainsOverweight
Apr 2016JefferiesMaintainsHold
Apr 2016Goldman SachsMaintainsBuy

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