Shares in US listed restaurant firms continue to be under pressure, says US heavyweight broker Jefferies today, ahead of fourth quarter numbers from the firms.
Overarching concerns on same store sales (SSS) / traffic and labor continue to hold back the group as they retrench from record high valuations, says analyst Andy Barish.
"We don’t believe 4Q EPS trends will change this trend and expect choppy quarters to continue to be greeted harshly."
Domino’s Pizza (NYSE:DPZ), the franchise chain, is rated a 'hold' by the broker with a target of US$102, while Papa Johns (NASDAQ:PZZA) is also on 'hold', with a target of US$64.
Popeye's Louisiana Kitchen (NASDAQ:PLKI) is rated as a 'buy' with US$59.14 with a price target of US$67, while Red Robbin Gourmet Burgers (NASDAQ:RRGB) is a 'buy' with a target of US$90.
Jefferies is not so upbeat on burger giant McDonalds as the 'Street', it says, estimating a +1% US same store sales for the quarter against Wall Street consensus of +2.5%.
The broker says although McDonalds is slowly turning its business, it is not powerful enough to keep the stock going given recent “safe haven” move and valuation.