Stifel maintains Jack in the Box stock hold rating, $35 target

On Thursday, Stifel analysts reiterated a Hold rating and a $35.00 price target on Jack In The Box stock (NASDAQ:JACK), which currently trades at $22.20. The reaffirmation of the stock’s rating follows the company’s announcement of its "JACK on Track" strategy aimed at improving its financial health and focusing on a single-brand, asset-light business model. The capital allocation changes, expected to unfold over the next 12-18 months, align with Stifel’s forecasts and are seen as potentially setting the company on a more positive path. According to InvestingPro, analyst targets range from $24 to $65, with the stock currently trading near its 52-week low of $22.34.

The fast-food chain also shared preliminary financial results for its fiscal second quarter, revealing comparable store sales that fell short of Stifel’s estimates, although EBITDA was reportedly better than expected. Despite these mixed results, Jack In The Box decided to eliminate its quarterly dividend, ending a 12-year streak of dividend payments, a move that likely contributed to the stock’s decline in after-market trading. InvestingPro analysis shows the company’s overall Financial Health score is "FAIR," with analysts forecasting a return to profitability this year despite current challenges.

The Stifel analyst noted that while the immediate market reaction saw a drop in share price, the current pullback could present a favorable buying opportunity for investors willing to hold for over six months. The analyst’s comments suggest a belief that the company’s strategic adjustments could lead to improved stock performance in the medium term. This view aligns with InvestingPro’s Fair Value analysis, which suggests the stock is currently undervalued, despite experiencing a significant 55% decline over the past year.

Jack In The Box’s "JACK on Track" initiative outlines several measures to streamline operations and enhance financial stability. The plan’s reception by investors and its effectiveness in steering the company towards a more efficient and profitable structure will be closely monitored in the coming months.

The stock’s movement and the analyst’s outlook reflect the broader context of the company’s strategic decisions and their immediate impact on investor sentiment. As Jack In The Box embarks on this transitional phase, market watchers will likely continue to assess the company’s progress against its stated goals and the implications for its financial performance.

In other recent news, Jack in the Box has announced the discontinuation of its dividend payout and plans to sell certain real estate assets to reduce debt as part of its "JACK on Track" initiative. The company aims to simplify its business model by closing 150-200 underperforming restaurants by the end of 2025 and exploring strategic alternatives for Del Taco, potentially including a sale. Jack in the Box has pre-announced a same-store sales decline of 4.4% for its second fiscal quarter of 2025, with adjusted EBITDA projected between $66 million and $68 million. Citi analysts have lowered their earnings per share estimates for fiscal years 2025 and 2026, citing additional franchisee closures and softer same-store sales, and have reduced the stock’s price target to $31 while maintaining a Neutral rating. Stifel analysts have also revised their outlook, decreasing the price target to $35 due to anticipated weak comparable sales trends, yet they maintain a Hold rating. Meanwhile, Jefferies adjusted the price target to $41, acknowledging better-than-expected same-store sales and earnings, but expressed caution about the company’s outlook due to a softer start to the second quarter and leadership changes. Additionally, Jack in the Box shareholders recently approved board member elections and executive compensation, indicating strong confidence in the company’s leadership.

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