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El Pollo Loco (LOCO) PT Raised to $23 at Jefferies Ahead of LA Reopening

March 12, 2021 7:53 AM EST
Get Alerts LOCO Hot Sheet
Price: $18.86 +0.96%

Rating Summary:
    5 Buy, 5 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 18 | Down: 12 | New: 23
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Jefferies analyst Andy Barish raised the price target on El Pollo Loco (NASDAQ: LOCO) to $23.00 (from $22.00) after the company preannounced 4Q EPS of $0.16, above expectations on lower G&A. While margins were weighed down by greater LA restrictions, consumer impact and costs, headwinds are fading ahead of LA opening in the next 1-2 weeks.

The analyst believes the LT growth opportunity is underappreciated with good visibility in SSS drivers, and 5%+ unit growth feasible in '23 and beyond. He maintained a Buy rating, stating "4Q preannounce SSS -0.2% (Co -3.0%, Franchised 1.8%) as greater LA SSS -2.1% given closed dining rooms, which represent 60% of system units and remain closed now but are expected to reopen at limited capacity in next 1-2 weeks, while non-LA markets saw SSS 3.3%. Importantly, 1Q-to-date SSS through Feb 24 was -2.6% (Co -6.8%, Fran 0.5%) with systemwide SSS -5.6% in greater LA and 2.7% in non-LA markets. We think the new stimulus checks and unemployment benefits will disproportionally help LA residents given unemployment there well above the nat'l avg and brand skew to Hispanics hurt by Covid, as well as more open dining rooms vs previous stimulus."

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