On Friday, Potbelly Corp (NASDAQ:PBPB) received an optimistic update from Craig-Hallum, as the firm increased its price target on the company's stock to $20.00 from the previous $16.00. The firm maintained its Buy rating on the shares, following Potbelly's announcement of robust fourth-quarter performance, which included better-than-expected sales, same-store sales (SSS), and adjusted EBITDA.
The sandwich chain's restaurant-level margins have hit their highest point since the current management team took charge in 2020. This milestone has bolstered confidence in the company's ability to achieve a 16% margin level.
Potbelly's guidance for the fiscal year 2024 (FY24) also surpassed analyst estimates, with projected adjusted EBITDA growth of 10% at the midpoint and an anticipated increase in system units of around 10%.
The management team at Potbelly outlined a long-term growth strategy that promises low single to mid single-digit comparable sales growth, low double-digit unit growth, and low double-digit to mid double-digit adjusted EBITDA growth. These targets are expected to position Potbelly among the leading growth concepts in the restaurant sector.
Potbelly's ambitious growth algorithm is supported by signed franchise agreements that aim to expand the store base by approximately 50% over the coming years. According to the firm, FY24 represents a pivotal year where execution on unit growth will be crucial.
Successful implementation is expected to elevate the company's stock to a higher trading multiple as Potbelly's growth story gains widespread acceptance.
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