Analyst Dishes Out Upgrade To Portillo's, Says Labor Headwinds Won't Ruin The Flavor

Guggenheim Securities analyst Gregory Francfort upgraded Portillo's Inc PTLO to Buy from Neutral at an increased price target of $25 from $22.
The analyst believes the company will see improvement in 2023 with outlet openings in Florida, Texas, Arizona and the primary market of Chicago, despite continued labor headwinds.
PTLO's Q1 2023 revenues of $156.1 million marginally missed the consensus, with an EPS loss of $(0.01), missing the consensus of $0.02.
Francfort raised the 2023 adjusted EBITDA estimate to $101 million (3%-4% above consensus) from $97 million and expects EPS of $0.27.
The analyst expects a 90 bps y/y expansion in margins, with a pricing increase of 8% expected to weigh on mid-single-digit commodity inflation in 2023.
Francfort sees lower-than-expected average unit volumes and less brand traction in new outlets, along with labor and staffing shortages across the industry, as risks.
Price Action: PTLO shares are trading higher by 0.91% at $20.65 on the last check Friday.

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