Stifel downgrades Jack In The Box stock on immigration policy concerns

Investing.com - Stifel downgraded Jack In The Box (NASDAQ:JACK) stock rating to Hold from Buy on Friday, while reducing its price target to $20.00 from $32.00. The stock, currently trading near its 52-week low of $17.02, has declined over 65% in the past year despite maintaining a significant 10.3% dividend yield. According to InvestingPro analysis, the stock appears slightly undervalued at current levels.

The research firm cited concerns that "aggressive immigration policies" would create "a significant sales headwind for an unpredictable period," prompting the analysts to "move to the sidelines" on the fast-food chain’s stock.

Stifel’s review of mobile location data indicated that comparable sales momentum has weakened in recent weeks, leading the firm to reduce its fiscal third-quarter same-restaurant sales projection to -5.5% from -4.0%, compared to the Street consensus of -4.2%.

Despite the downgrade, Stifel expressed confidence that Jack In The Box will find a buyer for its Del Taco brand and execute other aspects of its strategic plan, including selling properties to franchisees and closing underperforming stores.

The firm warned that declining sales could quickly lead to margin pressure and lower EBITDA, potentially impacting the company’s efforts to rapidly reduce its debt leverage.

In other recent news, Jack in the Box reported its second-quarter earnings for 2025, revealing an earnings per share (EPS) of $1.20, which exceeded analyst expectations of $1.07. However, the company’s revenue fell short, coming in at $336.7 million against a forecast of $345.76 million. The company continues to face challenges with declining same-store sales, which decreased by 4.4%, reflecting consumer caution. UBS analyst Dennis Geiger recently downgraded the price target for Jack in the Box to $27 from $44, maintaining a Neutral rating, citing ongoing sales challenges despite strategic initiatives. Jack in the Box has also announced a strategic focus on digital sales and technology modernization to drive growth. The company has suspended its dividend to prioritize debt reduction and is exploring the potential divestiture of its Del Taco brand. In a leadership update, Dawn Hooper has been appointed as the new Chief Financial Officer of Jack in the Box, bringing over 25 years of experience within the company. These developments are part of Jack in the Box’s broader "JACK on Track" growth strategy.

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