On Monday, Stifel, a financial services firm, revised its price target for First Watch (NASDAQ: FWRG), a restaurant chain, reducing it to $18 from the previous $22. The firm has decided to maintain a Hold rating on the stock.
The adjustment follows Stifel's analysis of mobile location data, which suggests that First Watch's traffic has likely decreased in the mid-single-digit (MSD) range during the second quarter. This performance is consistent with the trends observed in the first quarter results, which were reported in early May.
Stifel notes that First Watch is actively seeking methods to increase customer throughput, including the use of a newly implemented Kitchen Display System (KDS). However, Stifel's assessment indicates that such technological enhancements may not significantly enhance throughput due to limited impact on the speed of table turnover.
Additionally, First Watch is attempting to boost customer visit frequency by tapping into its existing customer database. Stifel expresses a preference for broader marketing strategies, suggesting that top-of-the-funnel marketing tactics might be more effective in driving increased traffic to the restaurant chain.
In light of the need for improved traffic performance, Stifel is maintaining its Hold rating on First Watch shares. The firm's stance remains cautious pending visible improvements in the company's customer traffic metrics.
InvestingPro Insights
As First Watch (NASDAQ: FWRG) faces challenges with customer traffic, recent data from InvestingPro provides additional context for investors. The company's market capitalization stands at $1.06 billion, and it's trading at a price-to-earnings (P/E) ratio of 48.85, which adjusts to 38.81 on a last twelve months basis as of Q1 2024. Notably, the company has demonstrated a robust revenue growth of 20.06% over the last twelve months leading up to Q1 2024.
InvestingPro Tips reveal that analysts have recently revised their earnings expectations downwards for the upcoming period, indicating potential concerns about First Watch's near-term profitability. Additionally, the stock has experienced significant price declines, trading near its 52-week low and showing a marked 33.27% drop over the last three months. Despite this, analysts predict First Watch will be profitable this year, and the company has been profitable over the last twelve months.
For investors seeking a deeper dive into First Watch's performance and future outlook, InvestingPro offers additional insights. There are more InvestingPro Tips available that could provide further guidance on the stock's potential. To access these valuable insights, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.