Our EquityAnalytics department is always updating price targets and ratings on companies that we cover based on new information. Our price targets and ratings are thoroughly researched and use financial analysis tools to determine stock prices. Today we are updating the following companies from our coverage: Buffalo Wild Wings (BWLD), Hanesbrands (HBI), Johnson Controls (JCI), and Panera Bread (PNRA).
The chart below shows new ratings, price targets, and buy/sell ranges vs. old ones:
Buffalo Wild Wings: Maintain at Sell, Decrease PT From $77 to $76
We continue to see BWLD as a Sell right now. The stock is coming back to Earth after their latest round of earnings. The earnings came in pretty much as we expected, but we did decrease our expectations slightly as same-store sales came in slightly under expectations. We believe BWLD is a great growth story and stock, but we think the valuation is still a bit excessive. PE is still over 30, and we believe future PE is about 22, which shows a bit of overvaluation. We are expecting 70%+ increase in operating income through 2016, and we believe that unless the company can increase margins this year, the company should remain pretty flat in stock price growth.
Hanesbrands: Maintain at Buy, Maintain PT at $38
Nothing too much changed after the company's last report as it came in basically at our expectations. The company is having a cyclically weaker year, but we are expecting a great 2013. We believe Hanesbrands continues to look strong and has dealt well with cotton prices. We have had a Buy rating all year, and the stock looks like it still has a lot of solid value with PE at sub-15 and forward PE at sub-9. We believe that given the value and continued margin growth (that many analysts were not expecting) is giving a solid risk/reward profile.
Johnson Controls: Maintain at Hold, Decrease PT from $33 to $29
Johnson Controls is a Hold for us, and we actually decreased our price target after what we saw as a disappointing quarterly result from the company. First off, the company disappointed on our expectations, missing our targets. Further, the company drastically increased capital expenditures over our expectations, which is a large negative on equity value. While it may mean solid future growth, we believe that the increase was well over what we saw even to get to the type of growth that mirrors what the company is expecting. The company is expecting a lot of margin improvement in the second half of the year, and we have priced that into our results. Right now, we believe the company needs to prove that they can improve margins before we will get behind the company.
Panera Bread: Upgrade from Hold to Buy, Increase PT from $176 to $193
What a great quarter once again for Panera. The company continues to be a gem. The company had great same-store sale growth. They increased expectations, which allowed us to raise our expectations. Our expectations do outpace the company's by a slight margin, but we see Panera as fairly cautious on their growth expectations. Channel checks continue to show really busy businesses and solid growth in new markets. Margins have continued to remain amazing despite increased costs of goods like coffee and wheat. The company is doing a great job of dropping SG&A as well as other costs in their bakery-cafe where they can. We remain an avid fan and see a move towards $200 in next twelve months.