Jack in the Box Continues to Climb, Analyst Lifts Price Target
2022.08.11 17:37
Jack in the Box (JACK) Continues to Climb, Analyst Lifts Price Target
By Sam Boughedda
Jack in the Box (NASDAQ:JACK) is up 1.66% in early Thursday trading after the company’s over 7% gain on Wednesday post earnings release.
The American fast-food restaurant chain reported adjusted fiscal third quarter earnings of $1.38 per share, $0.07 worse than the analyst estimate of $1.45 and below last year’s $1.64. Revenue for the quarter came in at $398.3 million versus the consensus estimate of $383.74 million.
Jack in the Box systemwide sales decreased 1.4%, and same-store sales dipped 0.6% during the quarter, with the company saying it raised prices to offset higher food, packaging, and wage expenses.
“Both Jack and Del Taco demonstrated top-line strength, delivering excellent same-store sales performances on a two-year basis, and sequentially higher sales on a three-year basis. As we navigate through the near-term, we are committed to utilizing the remainder of the year to return cash to shareholders via share buybacks in the fourth quarter, as well as strengthen our foundation to demonstrate unit growth progress beginning in fiscal 2023,” said Darin Harris, Jack in the Box Chief Executive Officer.
Reacting to the report, a UBS analyst, who maintained a Neutral rating and $85 price target on the stock, commented: “Underlying sss trends remained largely resilient given multiple sales levers across menu innovation, marketing, operations, & elevated check. On unit growth, JACK highlighted a growing new restaurant pipeline & increasing development agreements, while noting new franchisees are taking their time evaluating the opportunity given the macro. Focus is on greater visibility into the net positive unit growth trajectory and the outlook for FY23 in particular, given the potential impact of macro headwinds on the timeline (Cons. +1.8% FY23).”
In addition, a Morgan Stanley analyst maintained an Equal-Weight rating but raised the price target on the stock to $81 from $74. The analyst stated: “JACK shares closed 7% higher y/y on a mixed print, in our view, with elevated food cost inflation at both concepts (+16.8% JIB and +20.5% Del Taco) driving a $5M adj EBITDA miss (-7% vs MSe and consensus) but with total revenue mostly in line and systemwide comps of -0.6% JIB beating -1.4%/-1.8% MS/Street expectations. Narrower than expected y/y declines in transactions (-2.1% y/y) were solidly ahead of -MSD to -HSD expectations despite a 10% effective price increase, with the impact mostly felt on mix.”
