Oppenheimer Remains Bullish Ahead of Sonic Corp's (SONC) 4Q Report
Oppenheimer maintained an Outperform rating on Sonic Corp (NASDAQ: SONC), and cut the price target to $33.00 (from $40.00), ahead of the company's 4Q earnings report. SONC pre-announced -2% SSS, vs sell-side's stale estimate of +0.5%. The company also announced 4Q16 adjusted EPS would be $0.43-0.45 vs. Street's $0.48.
Analyst Brian Bittner commented, "We are not blind to the agony of sales disappointments, but we view SONC's situation as an attractive entry because: 1) its lower-risk earnings model has major padding (e.g. flat SSS would still drive +9% '17E EPS growth), 2) this suggests the stock's valuation discount is not a value trap (sub-10x EBITDA for a franchised model), 3) SONC is a proven SSS outperformer with a unique pipeline of technology, product and marketing catalysts, and 4) its unique cash situation could drive 15%+ share count reduction over the next 12 months."
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Shares of Sonic closed at $27.44 yesterday.