Boston, MA 03/06/2014 (wallstreetpr) – BJ’s Restaurants, Inc. (NASDAQ:BJRI) is heading up today as it soars by over 12% in the early phase of the market session, a day after the company received a downgrade rating from an analyst at Piper Jaffray.
Rating And Price Revised Downward
In a research report released yesterday, the analyst at Piper Jaffray revised their stock rating and price target downward for the restaurant chain company. The research firm now has ‘Neutral’ rating over it from its earlier ‘Outperform’ rating. The price target is lowered to $27 from the previous $30. The firm cited that the company’s initiatives to revive its business will take longer than expected.
LacklusterQuarterly Performance
Towards the end of last month, BJ’s Restaurants, Inc. (NASDAQ:BJRI) presented its fourth quarter results, which came in line with the market consensus. Its earnings per share matched the expectation of $0.06 per share, while its revenue also came in at $199.8 million, recording a slow paced growth of 8%, most of which is contributed by 12% growth in operating weeks. The deceleration in the revenue during the quarter is on account of expenses related to 17 new locations that it opened last year.
Comparable restaurant sales fell 2.7% as against 3% in the previous year’s same quarter. This decline is a reflection of reduced guest traffic at the rate of 2.3% during the period due to curtailed holiday shopping season and the polar vertex effect. Moreover, BJ’s Restaurants, Inc. (NASDAQ:BJRI)’s strategy of extensive promotional activity and deep discounts did not appear to work this time as evidenced from 0.4% decline in average guest check. On top of this, the operating margin also went down 380 bps in the last one year to 0.9%, pointing out to increase in the overall cost structure.
For the full year 2013, BJ’s Restaurants, Inc. (NASDAQ:BJRI) earnings per share show up at $0.85, which is a 24% decline year-over-year. Revenues over the year accelerated at the rate of 9.4% to $775.1 million. The company is eyeing to open 425 more restaurants in the home market, with more units based in Florida and Texas. A significant change this year in these openings is that it will be based on its new model of 7,400 square feet, which could trim down its expenditure by $1 million as compared to the existing format, while keeping the same productivity, eventually helping to garner more returns on invested capital.
