Yum! Called Top 2014 Restaurant Pick at Deutsche Bank; Group Vulnerable (YUM) (DFRG) (SBUX) (BWLD) (MCD) (CMG)
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Price: $156.95 --0%
Rating Summary:
7 Buy, 23 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
Rating Summary:
7 Buy, 23 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
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These days, finding restaurant stocks with compelling value isn't as easy, according to Deutsche Bank analyst Jason West. He thinks the group is vulnerable to correction, though he has buy ratings on a number of names including top 2014 pick Yum Brands (NYSE: YUM). Other buy-rated stocks include Del Frisco's (Nasdaq: DFRG), Starbucks Corporation (Nasdaq: SBUX), Buffalo Wild Wings Inc. (Nasdaq: BWLD), and McDonald's Corp. (NYSE: MCD).
"After a year of surprisingly strong stock performance against sluggish fundamentals, our biggest concern heading into 2014 is that investors decide restaurant stocks are too expensive and seek out better values elsewhere. The group trades at ~24x est. NTM P/E, near post-recession highs and vs. 5-year avg. of 18x. Rel. P/E = 1.52x vs. 5-yr. avg. of 1.34x. At the same time LT earnings growth rates are coming down as many established players mature and as consumer confidence and income growth remain below pre-recession peaks. This set-up leaves the group vulnerable for a correction, in our view," said west.
"YUM (Buy, $90 PT) is our top pick for 2014 given a combo of accelerating EPS growth and reasonable valuation (see upgrade note from 11/22/13 for details). We also like DFRG (Buy, $24 PT) on healthy high-end spending and cheap valuation for growth. YUM and DFRG also screen among the best in the industry on our adj. PEG analysis (~1.0x for YUM/DFRG vs. group ~1.4x; see Fig. 2). We continue to recommend SBUX, BWLD, and MCD though see less absolute upside on those names," he said.
West is more cautious on Panera Bread Company (Nasdaq: PNRA), Texas Roadhouse, Inc. (Nasdaq: TXRH), and The Wendy's Company (Nasdaq: WEN)
Deutsche Bank raised its price target on Buffalo Wild Wings to $155.00 (from $150.00). Chipotle Mexican Grill's (NYSE: CMG) target was raised to $500 (from $440).
For an analyst ratings summary and ratings history on Buffalo Wild Wings, Inc. click here. For more ratings news on Buffalo Wild Wings, Inc. click here.
Shares of Buffalo Wild Wings, Inc. closed at $142.46 yesterday.
"After a year of surprisingly strong stock performance against sluggish fundamentals, our biggest concern heading into 2014 is that investors decide restaurant stocks are too expensive and seek out better values elsewhere. The group trades at ~24x est. NTM P/E, near post-recession highs and vs. 5-year avg. of 18x. Rel. P/E = 1.52x vs. 5-yr. avg. of 1.34x. At the same time LT earnings growth rates are coming down as many established players mature and as consumer confidence and income growth remain below pre-recession peaks. This set-up leaves the group vulnerable for a correction, in our view," said west.
"YUM (Buy, $90 PT) is our top pick for 2014 given a combo of accelerating EPS growth and reasonable valuation (see upgrade note from 11/22/13 for details). We also like DFRG (Buy, $24 PT) on healthy high-end spending and cheap valuation for growth. YUM and DFRG also screen among the best in the industry on our adj. PEG analysis (~1.0x for YUM/DFRG vs. group ~1.4x; see Fig. 2). We continue to recommend SBUX, BWLD, and MCD though see less absolute upside on those names," he said.
West is more cautious on Panera Bread Company (Nasdaq: PNRA), Texas Roadhouse, Inc. (Nasdaq: TXRH), and The Wendy's Company (Nasdaq: WEN)
Deutsche Bank raised its price target on Buffalo Wild Wings to $155.00 (from $150.00). Chipotle Mexican Grill's (NYSE: CMG) target was raised to $500 (from $440).
For an analyst ratings summary and ratings history on Buffalo Wild Wings, Inc. click here. For more ratings news on Buffalo Wild Wings, Inc. click here.
Shares of Buffalo Wild Wings, Inc. closed at $142.46 yesterday.
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