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Investing.com -- Stifel has downgraded Jack in the Box (NASDAQ:JACK) shares from Buy to Hold in a note Friday, citing deteriorating same-restaurant sales (SRS) and external headwinds tied to immigration enforcement.
“The administration’s aggressive immigration policies are likely to create a significant sales headwind for an unpredictable period, causing us to move to the sidelines,” analysts wrote.
Stifel lowered its fiscal 2026 earnings per share estimate from $5.15 to $4.50 and reduced its price target from $32 to $20.
The firm’s mobile location data review suggests that sales momentum has weakened, prompting a revision of its third-quarter SRS projection to -5.5% from -4.0%, compared to the Street estimate of -4.2%.
“The sales trend appears to be deteriorating at Jack in the Box,” Stifel said.
A key concern is said to be the civil unrest and fear sparked by recent immigration enforcement activity, particularly in Southern California.
“With a heavy concentration of JIB stores on the West Coast (50%+ system units) and specifically in SoCal (~30% of system units), the disruption to foot traffic, curfews, and broader community unease has likely weighed heavily on sales in some trade areas,” the analysts warned.
Jack in the Box “significantly over-indexes with Hispanic consumers,” according to the firm. They added that this makes the brand especially vulnerable to any pullback in spending from that demographic.
While Stifel remains confident in the company’s broader strategy, including plans to sell Del Taco, franchise properties, and close underperforming stores, it cautions that “declining sales can quickly lead to margin deleverage and lower EBITDA.”
The analysts concluded that near-term pressures from external factors outweigh strategic positives, justifying the more cautious stance.