U.S. stocks lower as investors rotate out of tech ahead of Jackson Hole
Tuesday, Truist Securities adjusted its price target on Wingstop (NASDAQ:WING) shares, bringing it down to $242 from the previous $265, while maintaining a Hold rating on the stock. The stock currently trades at $210.82, down over 40% from its 52-week high of $433.86. According to InvestingPro analysis, despite recent volatility, Wingstop maintains a GREAT financial health score, supported by strong profitability metrics. The revision follows an evaluation of the company’s first-quarter same-store sales (SSS) estimates, which Truist now anticipates will be at a modest increase of 0.5%, falling short of the consensus expectation of a 1.8% rise.
The firm observed that although there was an improvement in March, a subsequent slowdown in April indicated that the lowest point for SSS might not have been reached yet. Consequently, Truist has also reduced its second-quarter SSS forecast to a decline of 2.0%, which is below the consensus projection of a 0.2% decrease. This comes despite Wingstop’s impressive 36% revenue growth over the last twelve months. InvestingPro subscribers can access 15+ additional insights about Wingstop’s growth trajectory and financial performance.
Truist analysts pointed out Wingstop’s strategic emphasis on value offerings, citing the launch of an improved tenders product on February 24 and the recent introduction of the ’Hot Honey Rub Box’ priced at $8. These moves are perceived as an acknowledgment by Wingstop of the financial strains faced by its core customer base.
Despite the falling wing prices, Truist does not foresee a significant impact on the company’s margins due to contracted supply. The firm estimates Wingstop’s adjusted EBITDA for the first quarter of 2025 to be around $55.9 million, which is a slight drop from the prior estimate of $56.3 million and below the consensus estimate of $57.3 million. The company maintains healthy margins with a gross profit margin of 48.08% and strong liquidity with a current ratio of 4.52. The updated price target reflects these adjustments and the cautious outlook on the company’s near-term performance. For comprehensive valuation analysis and detailed financial metrics, investors can access Wingstop’s full research report on InvestingPro.
In other recent news, Wingstop’s financial results and analyst ratings have been a focal point for investors. The company reported a 27% year-over-year revenue increase to $162 million in its fourth-quarter earnings, though this fell short of the consensus estimate of $165 million. Despite missing some targets, Wingstop exceeded expectations in key financial metrics, with an earnings per share (EPS) of $0.92 and adjusted EBITDA of $56.3 million, both marking a 44% increase year-over-year. Benchmark analysts responded by lowering their price target from $340 to $325 while maintaining a Buy rating, reflecting confidence in Wingstop’s long-term potential.
Jefferies upgraded Wingstop’s rating from Hold to Buy, setting a price target of $270, citing the company’s growth potential and capacity for significant EBITDA growth. Wells Fargo (NYSE:WFC) initiated coverage with an Overweight rating and a $270 price target, highlighting Wingstop’s unit expansion and digital marketing strategies as growth drivers. BTIG adjusted its price target from $370 to $350, maintaining a Buy rating, due to conservative estimates for same-store sales but remained optimistic about the company’s advertising and digital tool strategies.
Guggenheim also upgraded Wingstop to Buy with a $280 price target, emphasizing the company’s competitive strengths and potential for international expansion. The analysis suggests a possible turnaround in same-store sales by the second half of 2025. These developments indicate a varied but generally optimistic outlook from analysts regarding Wingstop’s future growth and market position.
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