On Tuesday, Piper Sandler showed a slight increase in confidence in shares of Kura Sushi USA Inc . (NASDAQ: NASDAQ:KRUS) by adjusting its price target to $99 from the previous $98, while keeping the stock at a Neutral rating. The price change reflects a series of revised estimates by the firm.
Kura Sushi has experienced significant volatility in its share price throughout the year 2024, with the stock starting at approximately $76, reaching a high of about $120 in March, and then plunging to a low near $49 in August.
Currently, the stock has bounced back to around $97. This instability is attributed to a turbulent macroeconomic environment and varying same-store sales (SSS) trends, which have sparked debates over the potential impact of new store openings on existing locations, particularly after the issue was raised during the company's July earnings call.
The analyst at Piper Sandler noted that despite the stock's robust recovery from its summer lows and a successful primary equity raise last month, concerns about cannibalization within the company's operations remain a central topic of discussion among investors. These issues have prompted the firm to adjust some of its financial projections.
Piper Sandler's updated outlook includes higher near-term SSS estimates alongside lower predictions for new store productivity for the fiscal years 2025 and 2026.
These changes have been incorporated into the firm's discounted cash flow (DCF) model, resulting in the revised $99 price target. The reaffirmation of the Neutral rating indicates the firm's cautious stance on the stock despite the slight uptick in the price target.
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