Panera Investors Seem To Be Expecting A Comps Miss In Q3

A week ahead of the third quarter results announcement, Baird Equity Research is not worried about possible comparable store sales miss from Panera Bread Co (NASDAQ: PNRA) in the third quarter. The company is scheduled to announce its results on October 25.

Analysts David Tarantino and Samuel Beres expect third-quarter results to provide increased short-term risk in the wake of skepticism on the restaurant stocks. However, they think that the company could still achieve its earlier EPS outlook of $6.60–$6.70 for the full year.

Therefore, the brokerage believes that the stock continues to offer risk/reward and maintains an Outperform rating with a target price of $248, implying more than 25 percent upside potentials from the current levels.

Related Link: Panera Bread Is Rising, But Shares Still Trading At A Discount

In a research note, Baird revealed, "Our Panera franchisee checks (reliable indicator of performance historically) pointed to August-September comps slightly better than in July, signaling potential for PNRA's company comps to reach the lower end of guidance. That said, we acknowledge risk that company comps may not have been as positive as our checks imply, given that the company was cycling a relatively difficult year-ago comparison and given that other fast-casual concepts in our surveys experienced softer comps in August-September."

While the company guided EPS $1.32–$1.35 for the third quarter, Baird estimates $1.34 based on 4.0 percent growth in comps compared to the guidance range of 3.5–4.5 percent.

The brokerage indicated that Panera might announce more specific EPS outlook for the fiscal year 2017 along with quarterly results. The firm expects EPS growth in the low double digits or close to its 13 percent predictions, which could be lower than the 16 percent growth estimate by consensus.

At last check, Panera had added $2.29, or 1.20 percent, on the day to trade at $193.48.

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