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Investing.com - Oppenheimer has downgraded Denny’s Corporation (NASDAQ:DENN) from Outperform to Perform following news of the company’s acquisition agreement. The stock currently trades at $4.11, having fallen 8.87% over the past week and 32.07% year-to-date, according to InvestingPro data.
Denny’s has agreed to be acquired by a group of investors that includes Yadav Enterprises, a large franchisee of both Denny’s and Jack in the Box restaurants, according to Oppenheimer’s research note.
The takeout price is set at $6.25 per share, representing a 52% premium and valuing the company at approximately $620 million in enterprise value. This price equates to 7.8x and 7.6x EV/EBITDA based on Oppenheimer’s updated estimates for 2025 and 2026, respectively.
Oppenheimer does not anticipate a competitive bidding process for Denny’s and expects the acquisition deal to close as planned in the first quarter of 2026.
The research firm noted that it does not expect Denny’s shares to trade based on fundamentals as long as the acquisition process remains ongoing, which factored into its decision to downgrade the stock rating.
In other recent news, Denny’s Corporation announced it has entered into a definitive agreement to be acquired by a group led by TriArtisan Capital Advisors for $6.25 per share. This all-cash transaction values the company at approximately $620 million, representing a 52.1% premium to its closing stock price at the time of the announcement. Following this acquisition news, Truist Securities downgraded Denny’s stock from Buy to Hold, maintaining a price target of $6.00. Additionally, Denny’s has amended its existing credit agreement, reducing its borrowing capacity from $400 million to $325 million and extending the maturity date to January 29, 2027.
Denny’s reported a 1.3% decline in same-store sales for the second quarter of 2025, aligning with Street forecasts. However, its EBITDA and earnings per share fell short of analyst projections, as the company increased its focus on value offerings amid tough economic conditions. In light of these results, Piper Sandler lowered its price target for Denny’s stock from $6.00 to $4.00, maintaining a Neutral rating. KeyBanc also maintained a Sector Weight rating on Denny’s, reflecting a cautious outlook for the restaurant chain.
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