Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - RBC Capital initiated coverage on Wingstop (NASDAQ:WING) with an Outperform rating and a price target of $315.00 on Wednesday. The target represents significant upside potential from the current stock price of $249.33, with the stock trading between $204 and $409.99 over the past 52 weeks. According to InvestingPro data, analysts maintain a bullish consensus on the stock, with price targets ranging from $185 to $477.
The firm views Wingstop as a strong competitor in the growing chicken market with a well-defined niche in wings that differentiates it from competitors. RBC Capital notes that Wingstop shares have fallen 34% since second-quarter earnings, creating an opportunity in a company with best-in-class franchisee returns of approximately 70%. The company has demonstrated strong financial performance with revenue growth of 22.74% and maintains healthy liquidity with a current ratio of 4.37, according to InvestingPro analysis.
While same-store sales growth has decelerated from the high-teens growth seen in 2023 and 2024, RBC believes this slowdown is already reflected in the stock price. The firm sees potential for growth reacceleration into 2026 from an upcoming loyalty program launch, which should benefit from Wingstop’s first-party data on approximately 60 million consumers.
RBC Capital’s analysis suggests Wingstop’s long-term target of over 6,000 units is achievable, supported by the company’s double-digit percentage unit growth. The firm also notes that Wingstop’s international expansion remains in early stages with a franchisee return profile similar to the United States.
The investment bank believes Wingstop’s premium valuation (EV/2027E EBITDA of 27x versus the industry average of 11x) is justified, and with the company’s EV/FY2 EBITDA trading at a 36% discount to its 10-year average, RBC Capital considers the recent selling pressure overdone. Currently trading at a P/E ratio of 41.44, Wingstop’s market capitalization stands at $6.94 billion. InvestingPro subscribers have access to over 15 additional key valuation metrics and insights, along with a comprehensive Pro Research Report that provides deep-dive analysis of the company’s financial health and growth prospects.
In other recent news, Wingstop has been the focus of several analyst reports and stock evaluations. UBS raised its price target for Wingstop to $385 from $335, maintaining a Neutral rating, following the company’s second-quarter results that revealed softer same-store sales trends. Stifel also adjusted its price target, lowering it to $375 from $405, yet keeping a Buy rating, indicating ongoing confidence in Wingstop’s prospects. Meanwhile, Benchmark reduced its price target to $340 from $410, maintaining a Buy rating after a company visit that included a meeting with Wingstop’s CEO and CFO.
Raymond James upgraded Wingstop to a Strong Buy from Outperform, keeping a $420 price target, citing the potential of the company’s Smart Kitchen system as a significant factor. Bernstein reiterated an Outperform rating with a $400 price target, expressing confidence in Wingstop’s growth strategy despite potential near-term pressures. The firm’s analysts highlighted the impact of Wingstop’s chicken sandwich launch and expanded delivery partnerships. These developments illustrate a mixed but generally optimistic outlook from analysts regarding Wingstop’s future performance.
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