Wunderlich Securities Sees Kona Grill As Poised To Accelerate Through 2016

In a report published Tuesday, Wunderlich Securities analyst Robert M. Derrington reiterated a Buy rating and $28.00 price target on Kona Grill (NASDAQ: KONA).

In the report, Wunderlich Securities noted, “Kona Grill Inc. (KONA), one of the industry's fastest growing restaurant companies, reported Q214 rev. up 15.9% to $29.9mm aided by 13% op. week growth and AWS of $88,200. Impressively, SSS increased 3.2% (vs. our/Street 3.0%), outperforming the Casual Dining index by over 400bps. That contributed to comp-store margins of 20.0% vs. our/Street 20.0%, and EPS of $0.11, in line with guidance and expectations. Management targets 20% Q3 revenue growth to $29.5mm, SSS of 2.0% and improving non comp-store margins. Given its strong development pipeline, we believe KONA appears on track to double its sales and adjusted EBITDA over the next five years. Factoring valuation metrics for KONA (at a discount to its high-growth peers) or 2.0x 2015 EV/revenue, we reiterate our PT of $28 and our Buy rating.”

Kona Grill closed on Monday at $19.14.