- A Buffalo Wild Wings takeover has only a 50% chance of succeeding, UBS Analyst Dennis Geiger said.
- The wing chain has shown good fundamentals after it changed the price of its wings.
- See the company’s stock price here.
Though Wall Street welcomed the possibility of a Buffalo Wild Wings takeover – gobbling up shares following a report Roark Capital submitted a bid for the chicken wing franchise – the chances of a takeover is just 50%, a UBS analyst said.
Analyst Dennis Geiger believes that while there is solid reasoning for a takeover, the company’s brand “is still strong and differentiated within casual dining.” He is optimistic that the wing chain could improve its stock performance on its own.
Buffalo Wild Wings is showing signs of a turnaround from otherwise lacklustre performance, he said. Roark Capital’s bid came just ahead of the company’s better-than-expected third-quarter results, which showed it has the ability to control its costs, Geiger said.
The company said the the price of its chicken wings are “historically high,” and has since cut back its popular half-price wings promotion to address that concern. Geiger said that wing prices are now around 20% below their recent highs, which could give the company more sales momentum in 2018 as the lower prices and cost savings work their way through.
This would give the company some leverage in navigating a takeover bid.
“We believe the company could either reject the bid or be looking for a higher bid,” he said. It was already reported that there may be more than one potential bidder for the company, according to a report by Street Insider.
Geiger raised his price target to $US148 from $US140 based on the company’s fundamentals and a potential takeout valuation.
Buffalo Wild Wings’ stock is trading at $US145.85 per share, down 3.89% this year.
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