An analyst upgraded Buffalo Wild Wings Inc. Wednesday after the restaurant chain's first-quarter revenue jumped about 22 percent and profit met Wall Street estimates.
KeyBanc Capital Markets analyst Lynne Collier raised her rating to "Buy" from "Hold" and set a $35 price target, implying she expects the stock to rise about 35 percent above Tuesday's $25.88 close.
Collier said the Minneapolis-based company's same-store sales, which rose 4.1 percent at company-owned locations and 2.1 percent at franchisees during the first quarter, will likely rise at 7 percent at company-owned stores in the second-quarter. The NCAA basketball tournament's shift from March to April will likely help, she said.
Same-store sales, or sales at stores open at least a year, is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.
The forthcoming stimulus checks from the federal government will likely boost customer traffic in the coming weeks, Collier said. The $168 billion stimulus has been touted by President Bush and Congressional leaders as a potential boost to the economy.
Prices for chicken wings have stayed lower, and Buffalo Wild is likely to secure a favorable contract within the next few months, she said.
Collier raised her second-quarter earnings estimate to 27 cents from 26 cents per share. Analysts polled by Thomson Financial expect, on average, earnings of 26 cents per share for that period.
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