Cowen Thinks Jack In The Box's Q4 Adj EBITDA To Be Affected By Economic Challenges - Jack In The Box (NASDAQ:JACK)

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  • Cowen & Co analyst Andrew Charles reiterated a Market Perform rating on the shares of Jack In The Box Inc JACK and raised the price target from $70 to $80.
  • The analyst raised the company’s same-store sales Q4 estimate above consensus based on quick service peers’ experience and industry checks that suggest a solid sales environment.
  • He also models adjusted EBITDA below consensus in Q4 based on sustained restaurant margin challenges, particularly COGS.
  • Charles prefers to remain below consensus on Q4 Jack margins given quick service industry store level COGS & labor headwinds.
  • He also maintains his Street-high Q4 33.8% Jack COGS estimate versus 32.6% CM based on industry quick service checks around stubbornly high food costs that he believes challenge implied 13.5% commodity inflation guidance.
  • Similar to Q4, despite the higher sales estimate, Charles maintains his 2023 Jack restaurant margins of 17.4% given cost inflation challenges he expects to persist through 1H23.
  • He noted while anticipated re-franchisings for 3 out of the 4 Evolving Markets will be a tailwind to margins in 1H23, labor costs will be a drag as minimum wage increased from $15/hour to $16.04/hour effective 7/1/22 in the high-volume, company-owned LA market.
  • Price Action: JACK shares are trading lower by 0.84% at $84.68 on the last check Friday.
  • Photo Via Company

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Image and article originally from www.benzinga.com. Read the original article here.