Del Taco Restaurants (TACO): Solid SSS Growth Likely To Be Rewarded - Wedbush

September 1, 2016 8:25 AM EDT
Get Alerts TACO Hot Sheet
Price: $13.59 +1.27%

Rating Summary:
    4 Buy, 1 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 25 | Down: 28 | New: 8
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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.

For an analyst ratings summary and ratings history on Del Taco Restaurants click here. For more ratings news on Del Taco Restaurants click here.

Shares of Del Taco Restaurants closed at $11.23 yesterday.

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