Analyst Actions: Choice Hotels, Buffalo Wild Wings, Lamar Advertising
JPMORGAN UPGRADES CHOICE HOTELS TO NEUTRAL
JPMorgan analyst Joseph Greff says his upgrade of Choice Hotels International (CHH) is based on: reasonable valuation; less negative operating leverage than generally perceived with its high-ROIC franchise business model; strengthening balance sheet.
Greff now views the shares as even risk-reward within his universe, despite low visibility on forward travel trends and what he expects to be an increasingly tough environment for new-build economy hotels over the next several quarters.
He raises his $1.61 2009 EPS view to $1.69 on RevPAR decline of 6%. In 2010, he sees 2010 EPS of $1.86, driven by 3.2% unit growth, 1.5% RevPAR growth.
MORGAN KEEGAN CUTS ESTIMATES FOR BUFFALO WILD WINGS
Morgan Keegan analyst Destin Tompkins says Buffalo Wild Wings (BWLD) $0.25 third quarter EPS missed his $0.32 estimate and the Street's $0.31 forecast, with downside driven by operating margin weakness.
Tompkins notes jumbo cut wing prices (the wing cut used by BWLD) have steadily increased since bottoming out in August, as chicken producers look to cut supply and raise prices. He adds that, with the recent slowdown in same-store sales, BWLD cut 2008 EPS growth view to 20%-25% from 25%, now implying $1.32-1.38, vs. $1.38 before.
He cuts his $1.45 2008 EPS estimate to $1.35 and $1.70 for 2009 to $1.65. He maintains a market perform opinion on the stock.
CARIS DOWNGRADES LAMAR TO BELOW AVERAGE FROM ABOVE AVERAGE
Caris analyst David Miller says ahead of Lamar Advertising's (LAMR) third quarter call on Nov. 6, he's performed yet another round of checks with proprietary sources within the media buying community; he has discovered, literally within the last 10 days, that business has - in the words of one buyer - "fallen off the cliff."
If he's correct in his assessment of future operating cash flow, then it's very possible that LAMR could, in very near future, be in violation of current debt covenants.
Miller cuts $0.11 fourth quarter 2008 EPS view to $0.03 loss, $0.41 2009 EPS to $0.17 loss. He cuts $43 price target to $10.
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