Street Calls of the Week
CHICAGO - Fast-casual restaurant chain Portillo’s Inc. (NASDAQ:PTLO), currently trading at $6.50 and showing signs of being undervalued according to InvestingPro analysis, announced today that Board Chairman Michael A. Miles, Jr. has been appointed as Interim Chief Executive Officer, effective immediately.
Miles replaces Michael Osanloo, who has departed as President and CEO and as a member of the Board of Directors. Osanloo will remain as a Special Advisor to Miles and the Board for the next 90 days to support the transition.
The company has established a Search Committee to identify a permanent CEO. The committee includes Directors Paulette Dodson, G.J. Hart, Eugene Lee, Jr., and Miles, and will be assisted by an executive search firm.
Miles previously served as President and Chief Operating Officer of Staples and Chief Operating Officer of Pizza Hut. He has been Portillo’s Board Chairman since 2014 and previously served as Interim CEO from 2014 to 2015.
"The Portillo’s brand resonates deeply with our guests, but our recent performance has not measured up to expectations," Miles said in a press release statement. This sentiment is reflected in the company’s stock performance, which has declined nearly 53% over the past year, with revenue growth slowing to 3.6%.
Eugene Lee, Jr., who served as CEO at Darden Restaurants from 2015 to 2022, has been appointed as Lead Independent Director during the transition period.
Portillo’s, known for its Chicago-style favorites, operates more than 90 restaurants across 10 states. The company completed its initial public offering in 2021 under Osanloo’s leadership.
In other recent news, Portillo’s Inc. has made significant adjustments to its financial guidance and strategic plans. The restaurant chain has revised its fiscal 2025 guidance, now expecting same-store sales to decline between 1% and 1.5%, a notable shift from its earlier forecast of 1% to 3% growth. This change reflects challenging industry conditions and falls short of analyst expectations of 1.2% growth. Additionally, Portillo’s plans to open only 8 new units in fiscal 2026, which is below the consensus expectations of 13 and the company’s prior long-term growth algorithm of 12-15% annually. Despite these revisions, Jefferies has maintained a Buy rating on the stock, though it lowered the price target to $10 from $12 due to softer third-quarter same-store sales. BofA Securities also maintained its Buy rating with a $14 price target, acknowledging the slower growth as a strategy to improve free cash flow. William Blair reiterated an Outperform rating, emphasizing the brand’s potential for geographic expansion beyond its Midwest base. Meanwhile, Stephens maintained an Equal Weight rating and a $10 price target, noting Portillo’s strategic reset to focus on core market execution and disciplined capital allocation.
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