Did The Election Impact BJ's Restaurants In Q3?

A day after BJ's Restaurants, Inc. (NASDAQ: BJRI) blamed the presidential elections as impacting its sales, Morgan Stanley reduced the target price from $38 to $35 while maintaining Equal-Weight rating on the stock. The company's earnings for the third quarter failed to meet estimates.

Analyst John Glass has slashed its unit growth for the year 2017 from 10 percent to 6–7 percent to reflect the environment. In a research note, he pointed out, "BJRI missed 3Q, despite lower comp expectations, amidst ongoing CDR weakness, soft CA sales — a negative read for concepts with heavy exposure there — and possible election impact."

Related Link: BJ's Restaurants May Lose Favor With Growth Investors Following Disappointing Q3

Following the comparable restaurant sales drop of 3.4 percent in the third quarter, the brokerage reduced its comps estimate for the fourth quarter from 1 percent growth to a 2 percent drop. Similarly, the firm slashed restaurant margins expectations from 19.9 percent to 18.1 percent. These negative factors made them to cut EPS forecast from $0.49 to $0.40 in the fourth quarter.

"Early October comps improved to -2 percent (including weather impact), but not enough to be a trend, in our view, and remain negative. Further BJRI's gap to the industry — which had been running positive ~100 bps — decelerated to ~200 bps below CDR Industry SSS in the 3Q," the analyst told.

For the year 2017, Morgan Stanley lowered EPS expectations from $2.13 to $1.92 to reflect the lower unit additions.

At last check, the stock traded at $33.75, down 5.44 percent.

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