On Thursday, BMO Capital increased the price target on Wingstop Inc . (NASDAQ:WING) shares from $345.00 to $360.00, maintaining a Market Perform rating on the stock.
The adjustment comes after the company reported a robust second quarter for 2024, with earnings per share (EPS) of $0.93, surpassing the consensus by $0.10. This performance was attributed to significant comparable sales growth and stronger-than-anticipated unit expansion.
Wingstop's positive results have led the company to revise its long-term goals upward. It now sees the potential for over 10,000 global stores, a significant jump from the previous estimate of 7,000 locations. Additionally, the company has increased its average unit volume (AUV) projections to $3 million from the prior $2 million forecast.
In response to the strong quarter, Wingstop has also updated its guidance for 2024. The company now expects comparable store sales growth to be around 20%, up from the previous expectation of low-double-digit growth.
The forecast for unit growth has also been raised, with the company aiming to open between 285 and 300 new stores, an increase from the initial range of 275 to 295. Furthermore, general and administrative (G&A) expenses are projected to rise.
BMO Capital has adjusted its estimates to reflect Wingstop's continued momentum and has raised the target price accordingly. The firm expressed a positive long-term outlook on the stock but remains on the sidelines due to the current valuation and the potential risk of a slowdown in comparable store sales growth from their elevated levels.
In other recent news, Wingstop Inc. has been the subject of significant attention from financial firms due to robust earnings and revenue results in the second quarter of 2024. The company reported substantial same-restaurant sales growth of 28.7% and earnings per share of $0.93, surpassing the anticipated $0.83.
This strong performance led to several financial firms adjusting their price targets for Wingstop, indicating confidence in the company's continued growth.
Morgan Stanley, for instance, increased the stock's price target to $415 from $400 reflecting the company's enduring strong performance. Similarly, Stifel raised its price target for Wingstop to $475, while Truist Securities updated its financial outlook for Wingstop, increasing the price target to $423.00.
Raymond James upgraded Wingstop from Market Perform to Outperform, reflecting the company's strong comparable sales momentum and increased targets for average unit volume and unit growth. Citi also increased its price target for the company's shares to $429, predicting a significant comparative sales increase.
These recent developments underline Wingstop's strategic market execution and its ability to navigate cost pressures while maintaining growth and customer value perception.
The company's strategic initiatives, including accelerated unit development and enhanced advertising, have led to an average unit volume increase of approximately 75% since 2019.
InvestingPro Insights
In light of Wingstop's (NASDAQ:WING) recent performance and the subsequent target price increase by BMO Capital, it's worth considering additional insights provided by InvestingPro. Wingstop's market capitalization stands at a robust $10.96 billion, emphasizing the company's significant presence in the market. Furthermore, the company's revenue growth is impressive, with a 31.98% increase in the last twelve months as of Q2 2024, and an even more remarkable quarterly revenue growth of 45.28% in Q2 2024.
InvestingPro Tips highlight that analysts are optimistic about Wingstop's sales growth in the current year, and 14 analysts have revised their earnings upwards for the upcoming period. This aligns with the company's strong revenue performance and could be a signal for potential investors. However, it's also noted that Wingstop is trading at a high earnings multiple, with a P/E ratio of 117.7, which suggests that the stock may be priced optimistically relative to its earnings.
For investors seeking more detailed analysis, InvestingPro offers additional insights, including 15 more InvestingPro Tips for Wingstop, which can be accessed at https://www.investing.com/pro/WING. These tips could provide a deeper understanding of the company's financial health and market position, helping investors make more informed decisions.
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