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On Wednesday, TD Cowen has adjusted its outlook on Jack in the Box (NASDAQ:JACK) shares, lowering the price target to $57 from the previous $59, while maintaining a Hold rating on the stock. The adjustment follows the company's performance in the third fiscal quarter and its forecast for the fourth quarter, which did not meet expectations.
The firm's analyst pointed out that despite Jack in the Box's efforts to offer value and innovate its menu, the fast-food chain lost market share in the third fiscal quarter and provided a forecast for the fourth quarter that was less optimistic than anticipated. This performance has led to a cautious stance from the investment firm.
The analyst further explained that Jack in the Box is likely to underperform its peers in the quick service burger sector during periods of heightened industry competition for value. This perspective is informed by a similar situation that occurred in 2018, suggesting a pattern of underperformance under such market conditions.
In response to these factors, TD Cowen has revised its projections for Jack in the Box's adjusted EBITDA, reducing estimates by 7% for the fourth quarter of 2024 and by 5% for the year 2025. The new price target of $57 is based on an approximate 8x forward EV/EBITDA multiple for the fiscal year two years ahead.
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