- CreditSuisse Analyst Lauren Silberman reiterated an underperform rating on shares of jack-in-the-box JACK and lowered the Price target from $84 to $73.
- The analyst told the company showed solid Q4 same-store salesincluding Jack in the Box 4% and Del Taco 5.2%, while unit growth was below expectations with a total of 29 net closures.
- JACK led earnings per share for FY23 to $5.25-$5.65 (prior consensus $6.56), the absence being due in part to a surge in technology investment.
- The company forecast positive net units growth for FY23 (implies <1% growth). While the analyst is encouraged by the increase in the development pipeline, the analyst sees the acceleration to ~4% by FY25 as a show-me story.
- The analyst believes the current execution is poor given the challenges in the consumer environment, macroeconomic headwinds fueling unit growth, and the noise surrounding closures and Del Taco refranchising making it difficult to model the company’s ongoing profitability , which will be the near-term focus.
- The analyst is looking for better insight into when a significant acceleration in unit growth will occur and an understanding of the long-term model before it becomes more constructive.
- JACK expects FY23 same-store sales to be in the low single digits, supported by continued execution of its hook-and-build and barbell strategies, benefiting from improvements in uptime, further dining room reopenings and digital.
- Price promotion: JACK shares traded 1.33% higher at $72.19 on the latest check Wednesday.
- Photo via company
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