On Monday, Wingstop Inc . (NASDAQ:WING) saw its price target increased by Raymond (NS:RYMD) James from the previous $345.00 to $375.00, while the Outperform rating on the company's stock was maintained.
Currently trading at $340.09, InvestingPro analysis indicates the stock is trading above its Fair Value, with analyst targets ranging from $180 to $468. The adjustment follows the recent announcement made by the company regarding a new $500 million share repurchase program. This repurchase authorization, which is about 5% of the company's market capitalization, includes a planned $250 million accelerated share repurchase (ASR) in the fourth quarter of 2024.
The new share repurchase authorization is part of a leveraged recapitalization strategy by Wingstop. It constitutes the second phase of the company's financial restructuring plan.
With a market capitalization of $9.93 billion and strong revenue growth of 35% over the last twelve months, InvestingPro data shows the company maintains a GREAT financial health score of 3.18/5, suggesting solid fundamentals despite its moderate debt levels.
The first phase included the issuance of $500 million in securitized notes, which carry a fixed interest rate of 5.85% over a seven-year term. The closure of this notes issuance occurred early last week.
The $500 million share repurchase program is seen as a significant move by Wingstop to enhance shareholder value. The planned $250 million ASR in the final quarter of 2024 is expected to play a key role in this strategy. The ASR is a common method used by companies to return capital to shareholders by accelerating the process of buying back shares.
Wingstop's financial maneuvers, including the leveraged recapitalization, have been closely monitored by market analysts. The company's decision to execute a leveraged recapitalization through the issuance of securitized notes followed by a share repurchase program demonstrates a proactive approach to managing its capital structure.
The increase in the price target to $375 by Raymond James reflects confidence in Wingstop's current strategy and its potential to positively impact the company's stock performance. InvestingPro subscribers have access to 12 additional exclusive tips about WING, including detailed insights about its valuation multiples and growth metrics.
Get the complete picture with InvestingPro's comprehensive research report, available for 1,400+ US stocks. The Outperform rating suggests that the analyst believes Wingstop's stock will perform better than the overall market or its sector in the foreseeable future.
In other recent news, Wingstop has made several significant financial moves. The company issued a $500 million securitized financing transaction and expanded its Variable Funding Note facility by $100 million. Additionally, Wingstop initiated a $250 million Accelerated Share Repurchase in the fourth quarter and approved a new share repurchase authorization of up to $500 million. This comes after almost completing the previous $250 million share repurchase authorization.
Stifel reaffirmed its Buy rating for Wingstop, despite adjusting its earnings per share projections due to these financial activities. BTIG also reaffirmed its Buy rating, with a price target of $370, expressing confidence in the company's strategic supply chain adjustments.
Wingstop's recent earnings report showed a significant increase in Q3 earnings per share of $0.88, a 35.4% rise, and a substantial 38.8% growth in total revenue to $162.5 million. The company's domestic same-store sales also rose by 20.9%, and Wingstop has revised its net unit growth guidance upwards, planning to open between 320 and 330 new units.
However, several firms adjusted their price targets for Wingstop, including Piper Sandler, dropping its target to $300, Citi, reducing its target to $315, BMO (TSX:BMO) Capital Markets, trimming its target to $335, and Stephens, adjusting its target to $468. Despite these adjustments, these firms maintain their ratings on Wingstop's stock, reflecting a cautiously optimistic sentiment towards the company's recent developments.
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