While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of Buffalo Wild Wings (BWLD) climbed 3% today after Wedbush boosted their price target on the restaurant operator.
So what: Wedbush analyst Nick Setyan maintained his outperform rating on the stock, but the new price target of $135 per share (from $125) represents about 23% worth of upside to its Friday close. While you might be nervous about the stock's red-hot price action in 2013, Setyan believes that reasonable comparable expectations, coupled with a stable wing cost environment, gives investors plenty of upside to look forward to.
Now what: According to Setyan's channel checks, same-store sales growth for the third quarter is currently on pace to come in above the consensus of 2.8%.
"We note a reacceleration in traffic growth following a disappointing 1.5% QTD comp in July as the start of the football season, combined with increased success and buzz around specific teams in company-owned markets as well as effective traffic-driving specials and promos, has led to an increase in SSS growth in August and September," said Setyan. "We also note an incremental 1% menu price increase that took effect July 15th, as well as an additional week of NFL and NCAA football games as further drivers of upside."
With the stock hitting a new 52-week high and trading at a forward P/E of 25, however, I'd wait for a wider margin of safety before betting too much on that bullishness.
