UBS cuts Jack in the Box stock target to $27, maintains neutral

On Thursday, UBS analyst Dennis Geiger revised the price target for Jack In The Box (NASDAQ:JACK) shares, reducing it significantly to $27.00 from the previous $44.00 while maintaining a Neutral rating on the stock. The revision comes as JACK trades near $23.48, close to its 52-week low of $22.01, having declined over 41% in the past six months. According to InvestingPro data, analysts’ targets for the stock range from $23 to $61. Geiger’s assessment followed Jack In The Box’s second-quarter results, which continued to show sales challenges, despite the introduction of the company’s "JACK on Track" strategic initiatives.

The company had previously announced its quarterly performance during a business update on April 23, indicating that consumer spending headwinds were persisting, especially among lower-income consumers. This trend is expected to continue into the third quarter, with results so far aligning with the second quarter’s performance. InvestingPro analysis shows the company maintaining a Fair financial health score of 2.02, with revenue of $1.55 billion in the last twelve months. Jack In The Box has reaffirmed its fiscal year 2025 guidance, projecting slight to moderate declines in same-store sales, adjusted EBITDA of $282-292 million, and adjusted earnings per share of $5.05-5.40, excluding the impact of future actions from the "JACK on Track" plan.

The company’s strategy in light of these results includes suspending its dividend to prioritize paying down debt and reducing leverage through real estate sales proceeds. There’s also the potential divestiture of Del Taco. Any remaining cash is likely to be allocated toward share repurchases, technological improvements, and store remodeling, with a reduced budget for company-owned development starting in 2026.

Geiger pointed out that while Jack In The Box’s valuation is not demanding, trading at approximately 5 times the estimated earnings per share for fiscal year 2026, the lowered price target to $27 reflects ongoing macroeconomic pressures and broader industry valuation challenges. Current metrics from InvestingPro show an EV/EBITDA ratio of 11.27x and a gross profit margin of 29.71%. The UBS analyst is looking for catalysts that could close the valuation gap with industry peers, such as more effective sales initiatives leading to improved traffic trends, margin gains, and an acceleration in net unit development. InvestingPro subscribers have access to 12 additional key insights and a comprehensive Pro Research Report for JACK, helping investors make more informed decisions about this restaurant stock.

In other recent news, Jack In The Box Inc. reported its second-quarter earnings for 2025, exceeding expectations with an earnings per share (EPS) of $1.20, surpassing the forecast of $1.07. However, the company’s revenue fell short, coming in at $336.7 million against the projected $345.76 million. This mixed financial performance highlighted ongoing challenges, including a 4.4% decrease in same-store sales and a decline in consolidated adjusted EBITDA to $66.5 million from $75.7 million last year. The company is focusing on digital sales and technology modernization as part of its strategic initiatives. Jack In The Box is also implementing its "Jack on Track" plan to strengthen its balance sheet and pay down debt. The company plans to close underperforming restaurants and prioritize growth-oriented investments. Analysts from Deutsche Bank (ETR:DBKGn) and Piper Sandler have shown interest in the company’s strategic alternatives for the Del Taco brand, with early interest noted.

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