Deutsche Bank Maintains a 'Hold' on Wendy's (WEN); Nov/Dec Sales Checks - Slowing Trend as New Burgers Lose Some Sizzle
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Price: $6.08 +1.33%
Rating Summary:
2 Buy, 7 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
Rating Summary:
2 Buy, 7 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
Trade WEN Now!
Deutsche Bank maintains a 'Hold' on Wendy's (NYSE: WEN) price target of $5.75.
Deutsche analyst says, "Recall that WEN's 4Q sales started off strong in Oct, supported by the launch of the revamped premium burger line, “Dave's Hot n' Juicy" burgers. Our checks suggest SSS have slowed since the national advertising ended on the new burgers and as the stores begin to lap the rollout of the new fries last Dec. We have also heard mixed reviews on the new mid-tier "W" burger (launched in mid-Nov) with some franchisees noting that acceptance has been good so far, while one indicated that consumers are trading down from higher ticket items. Overall, we believe SSS have likely decelerated into the low single digit range in Nov/Dec vs. an estimated +6% in Oct."
"Our 4QE EPS is also unchanged at $0.05. While slower sales following the new burger launch are not a huge surprise, the market may be disappointed if the company is unable to sustain decent sales momentum behind this major new product launch."
Another point - One franchisee also noted that ground beef prices continue to be a headwind. Ground beef prices are up ~25% y/y so far in 4Q11.
For an analyst ratings summary and ratings history on Wendy's click here. For more ratings news on Wendy's click here.
Shares of Wendy's closed at $5.00 yesterday, with a 52 week range of $4.29-$5.62.
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Deutsche analyst says, "Recall that WEN's 4Q sales started off strong in Oct, supported by the launch of the revamped premium burger line, “Dave's Hot n' Juicy" burgers. Our checks suggest SSS have slowed since the national advertising ended on the new burgers and as the stores begin to lap the rollout of the new fries last Dec. We have also heard mixed reviews on the new mid-tier "W" burger (launched in mid-Nov) with some franchisees noting that acceptance has been good so far, while one indicated that consumers are trading down from higher ticket items. Overall, we believe SSS have likely decelerated into the low single digit range in Nov/Dec vs. an estimated +6% in Oct."
"Our 4QE EPS is also unchanged at $0.05. While slower sales following the new burger launch are not a huge surprise, the market may be disappointed if the company is unable to sustain decent sales momentum behind this major new product launch."
Another point - One franchisee also noted that ground beef prices continue to be a headwind. Ground beef prices are up ~25% y/y so far in 4Q11.
For an analyst ratings summary and ratings history on Wendy's click here. For more ratings news on Wendy's click here.
Shares of Wendy's closed at $5.00 yesterday, with a 52 week range of $4.29-$5.62.
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