Dunkin' Brands (DNKN) PT Raised to $57 at UBS

UBS analyst Dennis Geiger reiterates Neutral rating and increases price target on Dunkin' Brands Group (NASDAQ: DNKN) to $57 (from $55), suggesting optimism on pricing and traffic drivers after the company provided solid fourth quarter EPS results.

Geiger comments, "Solid 4Q EPS results included an EPS beat, strong unit growth that met outsized guidance expectations, and inline Dunkin' US sss despite industry headwinds. Light 2017 EPS guidance was a function of a planned higher tax rate and lack of buybacks during the year. Slower net new unit expectations (~385) for this year appear prudent given current market conditions and uncertainty. Optimism came from: 1) reduced pricing during the quarter, 2) Dunkin' Donuts US and Canada President David Hoffmann outlining a plan to strengthen the core business and simplify menu, in addition to DNKN's six-point plan, and 3) potential for refinancing event over the next year or so. While we remain concerned about competitive headwinds to brand positioning and potential challenges to unit growth targets, defensive characteristics of the model, benefits from the new strategic plan, and potential corporate optionality represent a balanced risk/reward."

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