UBS Remains Neutral as Cheesecake Factory (CAKE) Looks For a Positive 2016
UBS maintained a Neutral rating on Cheesecake Factory (NASDAQ: CAKE), and cut the price target to $52.00 (from $55.00), following the company's 3Q15 earnings results. EPS was reported at $0.59, 0.03 above consensus estimates. 2016 guidance of 1.5-2.5% sss largely brackets the consensus, while the Street is already at the high end of the $2.56-2.68 EPS range which is somewhat constrained.
Analyst Keith Siegner commented, "Another Q of solid execution and cost mgmt., w/ benefits from timing of expenses, drove earnings upside despite the revenue shortfall. While sss consistency appears to have returned and earnings beats and raises cont., next yr's outlook was fine but unexciting given lower than expected unit growth and still negative implied traffic assumptions. 2016 guidance of 1.5-2.5% sss largely brackets the cons., while the Street is already at the high end of the $2.56-2.68 EPS range which is somewhat constrained for a 53rd wk year given 4-5% wage inflation. Despite ops momentum & still solid outlook, val. appears relatively full, trailing only select full service names. We view risk/reward as balanced given shares likely already reflect much of the incr. momentum and return to greater sales/earnings consistency, against ongoing labor headwinds, potentially reduced visibility into LT unit growth, and B/S conservatism."
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Shares of Cheesecake Factory closed at $51.99 yesterday.