Bojangles shares fell more than 8% on Wednesday afternoon after several analysts initiated coverage on the company and the reception was, well, mixed.
Jeffries rated the stock a “Buy” with a price target of $US28.01.
For the analysts, Bojangles’ growth is hinged on its strong brand prescience.
Jefferies wrote, “The brand is the #5 player in the $US21 billion [quick service restaurant] chicken category, but more importantly has a strong breakfast daypart that generates nearly 40% of sales and has a loyal, habitual consumer base. Bojangles’ has a strong should help the brand perform going forward.”
But Barclays analysts, who initiated coverage with a “Neutral” rating and a price target of $US27, were doubtful about the company’s ability to grow beyond the Southern US.
“BOJA has a strong ‘core’ Carolina presence, but recognition and therefore financial performance in ‘adjacent’ markets (2/3’s of future opens with AUV’s ~25% lower) are more challenging.”
Piper Jaffray analysts rated the stock “Neutral” with a price target of $US27 per share. “From a company perspective solid, but stuck from a stock perspective,” they wrote.
The fried-chicken-and-biscuit-chain went public less than a month ago and priced its IPO at $US19 a share at the higher range of its expectations. The stock spiked 29% on the first day of trading.
On Wednesday, the stock fell to as low as $US25.72 per share.
Here’s a chart showing the slide in shares: