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Benchmark raised its price target on Potbelly Corp (NASDAQ:PBPB) stock to $17.00 from $16.00 on Wednesday, while maintaining a Buy rating on the sandwich chain. The stock, currently trading at $10.54, has delivered an impressive 42% return over the past year, according to InvestingPro data.
The firm cited an "inflection point in systemwide unit growth" as a key factor in its decision, alongside continued growth in restaurant-level operating margins and adjusted EBITDA, which currently stands at $25.05 million. With a gross profit margin of 36% and an overall "GOOD" financial health rating from InvestingPro, Benchmark expressed confidence in Potbelly’s current sales trends, which have been boosted by "recent needle-moving new product introductions."
Benchmark analysts now expect Potbelly’s second-quarter same-store sales to reach the high end of the company’s 1.5%-2.5% guidance range. This projection is supported by quarter-to-date traffic results observed in Placer AI data. Unlock deeper insights into PBPB’s valuation and growth potential with InvestingPro, which offers exclusive financial health scores and 11 additional ProTips.
The revised outlook follows meetings Benchmark hosted on Thursday, June 12 between investors and Potbelly’s leadership team, including CEO Bob Wright and CFO Steve Cirulis. These discussions reinforced the firm’s positive view on the company’s growth trajectory.
Benchmark also modestly increased its adjusted EBITDA estimate for Potbelly’s fiscal year 2026, anticipating the company’s growth momentum will continue "throughout FY25 and over the next several years."
In other recent news, Potbelly Corporation reported its first-quarter 2025 earnings, revealing a slight net loss but exceeding revenue forecasts with $113.7 million, surpassing the expected $111.74 million. The company’s digital sales accounted for over 42% of total shop sales, driven by new menu items. Potbelly plans to open at least 38 new units in 2025, emphasizing franchise growth. The company demonstrated resilience with system-wide sales increasing by 4.8% year-over-year to $140.7 million and franchise revenue rising by 30.8%. Adjusted EBITDA was reported at $5.5 million, representing 4.9% of total revenue. Analysts from firms like Craig Hallum Capital Group and Lake Street Capital Markets noted Potbelly’s strong performance, particularly in digital sales and franchising initiatives. The company also highlighted potential challenges, such as tariff impacts on the supply chain and labor inflation, which could affect costs.
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