CIBC World Ups AFC Enterprises to Sector Perform

Says the company's business is improving and stock price is reasonable

CIBC World upgraded AFC Enterprises (AFCE ) to sector perform from underperform, explaining that the company's business is improving and stock price is "reasonable."

Analyst John Glass says the company has had recent improvement in sales traffic trends and streamlined corporate costs entering the new year. Meanwhile residual worries related to Hurricane Katrina have subsided. Glass also believes the stock's valuation is reasonable, especially in light of a strong free cash generative business model. He raised his 2005 earnings per share estimate to 29 cents amid the company's better sales, and his 2006 estimate to 84 cents on a combination of sales as well as General and Administrative Cost reductions. Glass set his $1.00 2007 earnings per share estimate and said he believes the shares command a slight premium to the peer group. He initiated a $16 price target, at 16 times his 2007 EPS estimate.

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