U.S. stocks lower as investors rotate out of tech ahead of Jackson Hole
On Monday, Wingstop shares (NASDAQ:WING) received an upgrade from Guggenheim, with analyst Greg Francfort lifting the stock’s rating from Neutral to Buy and setting a new price target of $280. The upgrade comes as the stock trades near its 52-week low, having declined over 42% in the past six months. According to InvestingPro data, the company currently trades at a premium valuation with a P/E ratio of 70x, though analysis suggests the stock is fairly valued based on InvestingPro’s proprietary Fair Value model. The upgrade is based on the analyst’s confidence in Wingstop’s competitive strengths and its potential for sustained strong unit growth. The price target is derived using a discounted cash flow (DCF) valuation approach, which supports a long-term store count potential exceeding 12,000 units.
Francfort’s analysis suggests that despite a soft start in same store sales in 2025, there is an expectation for a turnaround. This outlook is supported by Wingstop’s strong financial fundamentals, with revenue growing 36% year-over-year and maintaining a healthy gross profit margin of 48%. Comps are anticipated to bottom out in the second quarter of 2025, potentially remaining flat or slightly negative, before reaccelerating in the second half of the year. The analyst encourages investors to consider purchasing shares earlier rather than later in anticipation of this expected recovery.
The upgrade also reflects the optimism surrounding Wingstop’s international business expansion. Over the next 12 to 18 months, management is expected to provide more details on this segment, which Francfort believes will bolster investor confidence in the brand’s growth prospects. Wingstop’s long-term store count goal of over 12,000 units is still considerably less than Domino’s Pizza (NYSE:DPZ)’s 21,000 units, indicating room for significant expansion.
Wingstop’s strong brand momentum is further evidenced by the positive sentiment from lenders, real estate providers, business brokers, and potential franchisees within the restaurant sector. According to Francfort, these stakeholders place Wingstop at the top of their list for desirable brands, which suggests a robust trajectory for the company’s development.
Investors are now watching Wingstop closely, as the company’s strategic moves and the evolving market response could influence the stock’s performance in the coming months. The company maintains a strong financial health score according to InvestingPro, with liquid assets exceeding short-term obligations and a moderate debt level. For deeper insights into Wingstop’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence.
In other recent news, Wingstop’s financial performance and analyst reactions have drawn significant attention. The company’s fourth-quarter earnings showed a 27% increase in revenue to $162 million, which fell short of the $165 million consensus estimate. Despite this, Wingstop exceeded expectations in other areas, reporting an earnings per share (EPS) of $0.92 and adjusted EBITDA of $56.3 million, both surpassing analyst projections. Analysts from Benchmark, TD Cowen, Truist Securities, Bernstein, and Goldman Sachs have all revised their price targets for Wingstop, reflecting a mix of cautious optimism and concerns about future growth.
Benchmark reduced its price target to $325 but maintained a Buy rating, citing lower-than-expected SG&A expenses as a positive factor. TD Cowen also cut its target to $305, maintaining a Buy rating, while noting Wingstop’s sensitivity to lower-income consumer spending. Truist Securities set a target of $290, keeping a Hold rating, and expressed concerns about same-store sales trends. Bernstein adjusted its target to $330, maintaining an Outperform rating, and highlighted Wingstop’s advertising efforts and AI-led kitchen platform as positive indicators. Lastly, Goldman Sachs revised its target to $330, maintaining a Buy rating, and emphasized Wingstop’s strong unit economics and potential for mid-teens percentage unit growth. These developments reflect a diverse range of expectations for Wingstop’s future performance.
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