RBC Capital Remains Bullish on Panera Bread (PNRA) Ahead of 3Q Release
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RBC Capital reiterated an Outperform rating and $250.00 price target on Panera Bread (NASDAQ: PNRA) ahead of the company's 3Q earnings report. The results from a recent study of purchase intent indicated that Panera Bread outperformed its peers on Convenience and Taste by 175bps and 350bps, respectively and by ~300bps each on a two-year basis. Formal guidance is not expected until 4Q results.
Analyst Eric Gonzalez commented, "We are reiterating our Outperform rating and $250 price target, but we are lowering our 2017 and 2018 EPS estimates from $8.16 and $10.10 to $7.90 (+18% YOY) and $9.81 (+24% YOY), respectively to reflect a more muted restaurant industry growth rate. For 3Q, we are trimming our EPS estimate from $1.34 to $1.32 (+0% YOY; guidance $1.33-$1.35), and our company-owned SSS growth estimate from 3.75% to 2.75%, which is below management's 3.5%-4.5% guidance and represents +375bp gap to Blackbox (vs. 490bp last quarter; see Exhibit 2). With the stock nearly 13% off its post-2Q highs, we believe the market is preparing for a comp guidance miss. That said, we believe a combination of growth initiatives and diminishing food deflation headwinds can help reaccelerate momentum in 2017 and beyond. Our price target equates to 25.5x our 2018 EPS, which is equal to a PEG ratio of 1.5x using our 17% LT growth assumption."
Shares of Panera Bread closed at $195.32 yesterday.
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