Oppenheimer Remains Bullish Despite Qdoba Headwinds Driving Jack in the Box's (JACK) EPS Miss
Oppenheimer reiterated an Outperform rating and $86.00 price target on Jack In The Box (NASDAQ: JACK) following the company's 1Q results. Adjusted EPS of $0.93 missed Street's $1.03. Unexpected Qdoba costs were a $0.07 headwind versus consensus, accounting for most of the miss. Qdoba comps were +1.5% vs. Street's +1.3%. Guidance for 2Q is flat to +3% (vs. Street's +3%).
Analyst Brian Bittner commented, "We believe JACK trading down 19% in after-hours is an overreaction. While this release had disappointing casualties, the Street's '16E EPS will only move 2% lower. The big issue was JITB comps are -3% in the first four weeks of the current quarter (2Q16), below the Street’s +1.8%. But keep in mind this is: 1) lapping a monster fourweek trend of +10% (so 2-year is OK); and 2) only contains one week of new menu/ media help. On the 11AM call, management needs to focus on giving credibility to improving comps in 2H, and convince investors 1Q16's perfect storm of ugliness was a one-quarter misstep (after a long string of excellence). We will publish another note after the 11:30am earnings call."
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Shares of Jack In The Box closed at $76.91 yesterday.