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Morgan Stanley Cuts Target On Buffalo Wild Wings From $173 To $151 Amid Q1 Miss

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Buffalo Wild Wings, Inc. NASDAQ:BWLD - Morgan Stanley Cuts Target On Buffalo Wild Wings From $173 To $151 Amid Q1 Miss

Following a meaningful top-line miss for 1Q, Buffalo Wild Wings BWLD 13.92% reduced its FY16 EPS guidance by $0.33.

Morgan Stanley’s John Glass maintains an Equal-Weight rating on the company, while lowering the price target from $173 to $151.

Top-Line Concerns

“After a promising start to the Q optimism was high entering the Q. However, macro trends, and perhaps some internal marketing and pricing decisions, finally caught up with BWLD in Feb and we think most severely in March,” Glass mentioned.

Related Link: Social Mentions For Buffalo Wild Wings Down 38% Year-Over-Year In Q1

The analyst also noted that this was the first quarter when the company saw negative comp in five years, while expressing concern that this was the first time that Buffalo Wild Wings lagged the industry, although the gap had been narrowing for several quarters.

According to the Morgan Stanley report, “Mgmt aims to reverse this trend by focusing on 1) value occasions, 2) lunch, 3) take out and 4) driving traffic around this summer’s soccer tournaments.”

1Q Results

The EPS for the quarter came in below the estimate, driven by weak sales, and company comps of -1.7 percent, suggesting that traffic continued to be negative.

Sales significantly missed expectations, although labor was better “due to lower bonuses and strong hourly management.”

G&A was ahead of the guidance, driven by lower stock based comp, while wing prices rose 3 percent year-on-year to $1.97.

However, management cut the FY16 EPS guidance, based to a large extent on the new sales outlook, as well as higher wing prices.

Apr 2016BarclaysMaintainsOverweight
Apr 2016JefferiesMaintainsHold
Apr 2016Goldman SachsMaintainsBuy

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