On Thursday, BTIG upgraded Wingstop (NASDAQ:WING) stock from Neutral to Buy, setting a new price target of $370. The upgrade followed a significant drop in the company's share price after its earnings report the previous day. BTIG sees the decline below $300 as an opportunity for investors with a long-term perspective.
The firm's analyst highlighted the strength of Wingstop as a brand and its status as an impressive company, suggesting that there are still plenty of resources available to reaccelerate same-store sales. Among the strategies mentioned were increased advertising, menu innovation such as the addition of chicken sandwiches or tenders, and promotions like the boneless bundle.
Wingstop's acceleration in unit development and best-in-class unit economics were cited as the primary reasons for the upgrade. BTIG believes these factors, along with the company's long-term potential, provide a solid foundation for the positive outlook.
The analyst also noted that while the current focus is on the company's ability to drive growth, there is potential for management to increase the royalty rate on new units in the future, which could further enhance earnings potential. This move would reflect a strategic adjustment to capture additional revenue from the expansion of Wingstop's franchise operations.
In summary, BTIG's upgrade to a Buy rating reflects confidence in Wingstop's capacity to bounce back from the post-earnings sell-off and continue its growth trajectory. The firm's new price target of $370 indicates a belief in the company's value proposition and upside potential for investors.
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