Share prices generally move in tandem with analysts’ recommendations. As analysts raise their next-12-month target prices, stocks’ share prices may also increase, and vice versa.
In this article, we’ll discuss analysts’ revised estimates and recommendations for fast casual companies following their 4Q15 results.
In the above chart, we can see that Fiesta Restaurant Group (FRGI) is the most favored stock, with 100% “buy” recommendations. Habit Grill (HABT) is the next most favored, with 90% “buy” recommendations and 10% “hold” recommendations.
Shake Shack (SHAK) and Potbelly (PBPB) are the least favored stocks, with 20% of analysts recommending “sells.” Noodles & Company (NDLS) and Chipotle Mexican Grill (CMG) have also received 14% and 12% “sell” recommendations, while 10% of analysts are recommending “sells” on Zoe’s Kitchen (ZOES).
Analysts are forecasting that Habit Grill will reach $30 over the next 12 months. This represents a return potential of 58%. Fiesta Restaurant Group follows, with a 38% return potential. Shake Shack has a 13% return potential.
Potbelly, Chipotle Mexican Grill, and Panera Bread are expected to return 8%, 7%, and 6%, respectively, over the next 12 months. However, analysts see Noodles & Company and Zoe’s Kitchen as overpriced and expect them to correct by 4% and 8%, respectively, over the next 12 months.
A share price that is lower than a stock’s target price doesn’t mean that the stock is an automatic “buy.” Before investing, investors should carefully analyze the various metrics that we’ve discussed in this series.