Barclays Maintains an 'Equalweight' on Sonic (SONC); F3Q Strong, but Comps Softening of Late
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Price: $43.49 --0%
Rating Summary:
4 Buy, 20 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
4 Buy, 20 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Barclays maintains an 'Equalweight' on Sonic (NASDAQ: SONC), PT $10.
Barclays analyst says, "SONC fundamentals remain highly volatile, prompting a lack of confidence in a sustainable comp improvement, which is likely to limit near-term outperformance. And that coupled with our longer term structural concerns keep us cautious at current levels. 3QF11 EPS was better than expected, driven by upside to co-op comps. But comp slowed late in 3Q (May) and into June, with uncertainty on timing of a rebound. Looking to F12, top and bottom visibility is limited. Longer term, we continue to believe SONC's comp and unit growth are structurally challenged, unable to return to historical sales growth and peak restaurant margins, with competitive convergence ongoing and franchisees cautious on unit growth. We remain cautious assuming a return to consistent double-digit EPS growth to justify the valuation; currently 16x+, at or above stronger growth QSR peers, and vs. the 7-20x three-year range and 14x average."
For more ratings news on Sonic click here and for the rating history of Sonic click here.
Shares of Sonic closed at $10.52 yesterday.
Barclays analyst says, "SONC fundamentals remain highly volatile, prompting a lack of confidence in a sustainable comp improvement, which is likely to limit near-term outperformance. And that coupled with our longer term structural concerns keep us cautious at current levels. 3QF11 EPS was better than expected, driven by upside to co-op comps. But comp slowed late in 3Q (May) and into June, with uncertainty on timing of a rebound. Looking to F12, top and bottom visibility is limited. Longer term, we continue to believe SONC's comp and unit growth are structurally challenged, unable to return to historical sales growth and peak restaurant margins, with competitive convergence ongoing and franchisees cautious on unit growth. We remain cautious assuming a return to consistent double-digit EPS growth to justify the valuation; currently 16x+, at or above stronger growth QSR peers, and vs. the 7-20x three-year range and 14x average."
For more ratings news on Sonic click here and for the rating history of Sonic click here.
Shares of Sonic closed at $10.52 yesterday.
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