Wingstop Inc. (WING) maintains a "Neutral" rating from Citi, with a revised target price of $334, reflecting a 35x multiple on next twelve months (NTM) EBITDA. The report highlights Wingstop's strong new store economics and digital tools driving positive same-store sales (SSS) growth. However, Citi expresses caution due to challenging sales comparisons, particularly a +28.7% lap in Q2, and potential macroeconomic headwinds.
Citi's analysis is centered around the upcoming Q4 2024 earnings release on February 19, with key focus areas including 2025 unit growth guidance, the impact of the MyWingstop platform on operations, and marketing strategies for 2025. The report notes a slowdown in foot traffic and app usage, alongside a decline in new customer acquisition in late 2024, though these metrics have stabilized recently. Wing prices have decreased, which could impact profitability if they rise again.
Citi has adjusted its EPS estimates for 2024 and 2025 to $3.67 and $4.09, respectively, citing stronger unit growth but offset by higher interest costs. The report also mentions risks such as potential increases in chicken wing prices, slowing unit growth, and consumer resistance to price hikes.
Wingstop's stock closed at $305.39 on February 5, 2025, down 0.5% from the previous day.