On Monday, Deutsche Bank (ETR:DBKGn) has adjusted its outlook on Jack In The Box (NASDAQ: NASDAQ:JACK), reducing the price target to $51.00 from the previous $56.00, while maintaining a Hold rating on the stock.
The adjustment follows expectations of cautious sentiment towards the company's fourth fiscal quarter results, with concerns about potential misses in both top and bottom line figures, as well as guidance that may not meet current sell-side expectations.
The analyst pointed out that same-store sales (SSS) are believed to have improved at the start of the first fiscal quarter, citing stronger performance in the burger category in October and potential gains from competitor McDonald's (NYSE: NYSE:MCD) recent weaknesses. However, there is a risk that a resurgence at McDonald's could impact Jack In The Box's SSS throughout the remainder of the quarter.
In light of the uncertain economic climate and a competitive market, Jack In The Box is expected to provide a more conservative outlook for fiscal year 2025. The firm has revised its fourth fiscal quarter and full-year 2025 sales, margin, and EPS estimates downward. The new forecast anticipates a fiscal year 2025 EPS of $5.98, down from the previous estimate of $6.41 and below the consensus of $6.35.
The report also notes the return of Lance Tucker as Chief Financial Officer (CFO) of Jack In The Box, starting January 13, 2025. Tucker's appointment follows the departure of Brian Scott and marks his second tenure as CFO, having previously served in the role from March 2018 to July 2020.
In other recent news, Jack In The Box is set for several significant developments. The company's fourth-quarter earnings report is anticipated, with Oppenheimer adjusting its financial outlook, reducing the price target to $60 from $70 while maintaining an Outperform rating. The company's 2025 EBITDA prediction was revised to $306 million, falling short of the consensus estimates of $318 million.
Simultaneously, the company experienced a decrease in same-store sales for the fourth fiscal quarter, as reported by Loop Capital. Despite this, Jack In The Box announced a franchise agreement to open 12 new locations in the Chicago area.
There has also been a shift in financial leadership, with CFO Brian Scott departing and Dawn Hooper stepping in as interim CFO. Meanwhile, the company-owned restaurant Del Taco, opened a new location in Kissimmee, Florida, introducing a collaboration with actor Danny Trejo's Trejo's Tacos.
Analyst firm TD Cowen revised its outlook on Jack In The Box's shares, lowering the price target to $57 from $59, while maintaining a Hold rating. For the full year, the company expects an adjusted EBITDA between $320 million and $325 million, with operating EPS of $6.10 to $6.25. These are the recent developments surrounding Jack In The Box.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Jack In The Box's financial situation, providing context to Deutsche Bank's cautious outlook. The company's market capitalization stands at $892.04 million, reflecting its current market valuation. Despite the challenges highlighted in the article, Jack In The Box maintains a dividend yield of 3.93%, which may appeal to income-focused investors.
InvestingPro Tips reveal that the company has been aggressively buying back shares, potentially indicating management's confidence in the stock's value. However, this should be weighed against the fact that Jack In The Box operates with a significant debt burden, which could impact its financial flexibility in the competitive fast-food landscape.
The company's recent performance aligns with Deutsche Bank's concerns, as evidenced by a revenue decline of 7.43% over the last twelve months. This data supports the analyst's expectation of potential misses in top-line figures for the upcoming earnings report.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide valuable insights into Jack In The Box's financial health and future prospects.
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