Wunderlich: Sonic Still Positioned To Outperform

In a report published Monday, analyst Robert M Derrington of Wunderlich Securities has reiterated his Buy rating on Sonic Corporation (NASDAQ: SONC), while maintaining the price target at $39. The analyst believes the company offers a unique drive-in experience, which along with menu innovations and aggressive promotions is likely to drive same-store sales going forward.

Derrington has upgraded his EPS growth estimates for the company following the strong Q2F15 results, while remaining cautious about the Q3 projections due to expectations that the unfavorable weather in March could impact results for the quarter.

Same-store sales were robust in Q2, with Sonic's revenue rising 15 percent to $126.2 million during the quarter. Margins expanded and franchise revenues also rose. Accordingly, the EPS growth guidance for FY15 has been raised to 25-27 percent or $1.05-$1.07.