Why Panera Bread Might Be a Stale Opportunity

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 upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Panera Bread  (NASDAQ: PNRA  ) sank 2% today after Wedbush downgraded the bakery-cafe operator from outperform to neutral.

So what: Along with the downgrade, analyst Nick Setyan lowered his price target to $165 (from $199), representing just 3% worth of upside to yesterday's close. While contrarian investors might be attracted to Panera's share slide in recent months, Setyan's channel checks indicate disappointing sales in the second half of the year and, in turn, limited short-term appreciation potential.

Now what: Wedbush lowered its 2013 EPS to $6.81 from $6.87 and its 2014 view to $7.78 from $7.84. "[W]e no longer expect upward estimate revisions based on our most recent round of checks that indicate a softer end to Q3, and Q4 QTD SSS growth below expectations," Wedbush noted. "Our checks of 10% of company-owned locations indicated comp deceleration as Q3 came to a close and Q4 QTD comps of ~2.5%." Of course, with the stock now off nearly 20% from its 52-week highs and trading at a PEG ratio just above 1, Panera's long-term growth prospects might be available on the cheap. 

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