Buffalo Wild Wings' Mild Results Keep Morgan Stanley On The Sidelines

Buffalo Wild Wings (NASDAQ: BWLD) reported its Q3 results, with “better than feared” sales and EPS in line with the consensus.

Morgan Stanley’s John Glass maintained an Equal-weight rating on the company, while lowering the price target from $151 to $148.

“While slightly below expectations from a top-line perspective, 3Q results were good enough against lowered expectations, driven by weak checks and concern about NFL TV ratings woes,” Glass mentioned.

Although the biggest concern, refranchising, is still unresolved and unlikely to be addressed until Q4, the analyst believes that the greater details provided on cost initiatives were encouraging.

“Signs of improvement in comps over the course of 3Q tempered the negative impact on the 4Q from weather/holiday shifts, but all in fundamentals appear to be moving in the right direction--at least slightly,” Glass said.

The analyst expects 60-70 bps worth of restaurant margin initiatives, expected in 2017, would begin to pave the way for restaurant levels margins of 20 percent by 2019, although no formal guidance was provided for 2017.

Buffalo Wild Wings reported its Q3 EPS at $1.23, marginally below the estimate but in line with the consensus.

Company same-store sales declined 1.8 percent during the quarter, representing a greater decline than expected, driven in part by pricing.