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Analyst Turns More Optimistic Toward Jack in the Box

By Daniel Miller – May 27, 2020 at 1:34PM

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Goldman Sachs bumped Jack in the Box's price target by $24 -- here's why.

Jack in the Box (JACK 0.38%), a restaurant company that operates and franchises over 2,200 restaurants in 21 states, received a confidence boost from Goldman Sachs as analyst Katherine Fogertey upgraded the stock from sell to neutral. Fogertey also significantly raised Jack in the Box's price target from $42 up to $66 per share.

Driving her optimism was the company's improving same-store sales momentum and franchise economics, and the belief that growth can still reaccelerate in 2020.

Cheeseburger with fries

Image source: Getty Images.

Restaurant stocks have been hammered since COVID-19 flipped the industry on its head, especially for restaurants focused on the dine-in crowd, but Jack in the Box has narrowed its losses compared to the S&P 500 over the past six months.

JACK Chart

JACK data by YCharts

More analysts are positive on Jack in the Box than negative -- Wall Street has seven buy ratings, 11 neutral ratings and only one sell rating on the company -- but there will certainly be more financial pain due to COVID-19 for newly appointed CEO Darin Harris. Long-term investors can remain optimistic as the company saw strong sales growth before COVID-19 swept over the nation and forced restrictions. Management credited attractive price points and new menu items such as Tiny Tacos as the driving force for top-line growth. If the economy can gradually rebound, and management continues to innovate its menu, Fogertey's might not be the last analyst upgrade we see for the restaurant chain.

Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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