UPDATE: Stephens Starts Fiesta Restaurant Group (FRGI) at Overweight
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Stephens analyst James Ritherford initiates coverage on Fiesta Restaurant Group (NASDAQ: FRGI) with a Overweight rating.
The analyst comments "FRGI is an undervalued and under-followed small cap restaurant in our view. Some investors may recall FRGI with skepticism due to the poorly planned and poorly executed Pollo Tropical expansion from 2013 - 2016 into TX, GA, and TN. However, with a new management team, an ongoing digital transformation, and various near-term sales drivers, we are optimistic about the go-forward story. Decades of results show that Pollo Tropical is a very strong brand with impressive FCF generation abilities in its core markets. Taco Cabana is a smaller part of the valuation story, and there are turnaround efforts underway for that brand. While FRGI may not be a big unit growth compounder today, we do believe it is undervalued, and that execution and a strong management team will be the catalyst to unlocking that value. We are initiating coverage on FRGI with an Overweight rating and a $17 price target."
Shares of Fiesta Restaurant Group closed at $13.73 yesterday.
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