Jefferies affirms El Pollo Loco (Nasdaq: LOCO) at Buy with a price target of $27 following Q1 results reported Thursday night.

Analyst Andy Barish noted that LOCO's Q1 EPS of $0.18 topped the consensus of $0.17 on a slight sales beat. Comparable-store sales gains of 3.5 percent missed consensus expectations calling for a 5 percent increase.

Barish commented, Under 500 calorie menu laps from last year’s launch did not drive incremental traffic and the company’s move to promoting higher priced shrimp/beef items created some customer confusion and less support in advertising for more traffic-driving items. 2Q has started out softer than 3-5% SSS guide given promo of both shrimp and beef at same time. We believe 2H SSS will improve as marketing gets more balanced, salads are relaunched as “Hand Carved,” shrimp items are redone, Value refocused at end of summer and other levers remain. We look for a return to 4% SSS in company-owned stores in 2H.

Bottom Line: [Q1 results] and 2Q SSS guide down due to tough start to qtr on marketing issue related to new proteins, will weigh on the stock. Meanwhile, unit growth continues to ramp toward +8% next yr with success in Houston & we find LOCO attractive for unchanged earnings growth of 25%+ in ’15. We'd be buyers on pullback, Barish said.

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