Del Taco Restaurants (TACO): Solid SSS Growth Likely To Be Rewarded - Wedbush
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Wedbush analyst, Nick Setyan, reiterated his Outperform rating on shares of Del Taco Restaurants (NASDAQ: TACO) after recent checks indicate SSS growth is tracking in-line to above 3.7% consensus in Q3. New menu items such as the ‘Del Taco’ are the drivers. Additionally, there seems to be a disconnect between Del Taco’s category-leading fundamentals and its category-trailing valuation.
The analyst is maintaining his 4.0% comp expectation and Q4 comp estimate of 3.0%. "While we assume transactions remain slightly positive in Q4 (management indicated tx already turned positive in Q3), we also assume that menu pricing drops to 2.5% from the current 3.5%, and the ‘Platos’ entrée introduction does not drive positive mix. We believe there is some probability that incremental pricing is taken in Q4, and we believe there is a high degree of likelihood the Platos entrées drive positive mix".
No change to the price target of $15.
Shares of Del Taco Restaurants closed at $11.23 yesterday.
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