Wingstop (WING) is expected to see ongoing same-store-sales weakness through Q2, but remains well positioned to grow average unit volumes over the coming years given strong brand positioning, sales initiatives, and operational improvements, UBS Securities said in a note emailed Tuesday.
Traffic and sales should benefit from enhanced operations with Smart Kitchen, top of funnel marketing strategies, Club Wingstop loyalty platform launch, promotions, and the world cup, the brokerage said.
UBS said the company's key sales initiatives should aid in improving trends through the year, despite macro headwinds, including softness in lower income and Hispanic consumer spending, the note added.
While customer surveys found that lack of affordability was the main reason for reduced visits, the brokerage said drivers for traffic growth still exist by improving service speed, enhancing food quality, promotional activity, and better affordability.
UBS said it seeks evidence suggesting a return to strengthened comps growth before getting more constructive on Wingstop shares.
UBS kept a neutral rating on Wingstop and lowered the price target to $160 from $210.
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