Wunderlich Names Its 3 Favorite Restaurants

Jack in the Box Inc. (NASDAQ: JACK), Sonic Corporation (NASDAQ: SONC) and Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB) were named as Wunderlich’s favorite restaurant stocks in a report issued Thursday.

Analyst Robert M. Derrington commented on the stocks after attending the ICR Conference at which 30 publicly traded restaurants made presentations.

Jack in the Box “management spoke with confidence regarding its operating trends at both its Jack and Qdoba brands. Qdoba’s momentum appears encouraging, with recent changes in pricing, food, and concept evolution likely to contribute to especially strong SSS for the next 2-3 years.” according to the analyst report.

The firm maintained a Buy rating and $88 price target on Jack in the Box which recently traded at $82.70, down 2 percent.

Derrington noted that “Sonic's management highlighted its short-term and long-term initiatives as part of its Multilayer Growth Strategy. That program has contributed to management's plan to drive revenue growth, SSS of 1-3 percent, and EPS of 14-20 percent through FY2017.”

The firm maintained a Buy rating and $33 price target on Sonic which recently traded at $31.31, down 1.5 percent.

Red Robin’s CEO “laid out its current and future initiatives to reinforce RRGB as the ‘Burger Authority’ and achieve long-term revenue growth in the upper-single digits. The company expects to complete another 125 of its Brand Transformation (BT) remodel program, which contributes mid-single digit SSS post its completion.” Derrington added that “ with almost 80 percent of RR locations near movie theaters, management noted that weak box office sales hurt its business in 2014” but the trend is expected to reverse.

The firm maintained a Buy rating and $76 price target on Red Robin which recently traded at $79.84, down 2 percent.