Kura Sushi USA's Robust Financial Performance And Future Prospects: Bullish Analyst Raises Expectations

Stephens analyst Joshua Long reiterated an Overweight rating on Kura Sushi USA, Inc. KRUS, raising the price target to $95 from $85, reflecting a long-term same-store sales estimate.

The analyst notes that the company's recently-reported 3Q23 results were generally in line with revenue dollars and ahead of expectations on restaurant-level margins, EBITDA, and EPS. 

The company opened one new unit during the quarter as expected. KRUS' maintained annual development guidance implies 3-5 total new units in 4Q (noting one new location has already opened).

The analyst raised FY23E top-line estimate from $187.7 million to $188.0 million, driven by top-line strength and new unit development.  

Looking forward, June comps for same-store sales are running at +14.7% in the 4Q23-to-date period (solidly ahead of 4Q23 consensus estimates of +6.0%), the analyst notes.

A strong partner collaboration lineup currently featuring a popular animated sitcom, "We Bare Bears," supports same-store sales.

The analyst increased FY23 EBITDA estimates from $6.6 million to $7.7 million, and adj. EPS estimates from ($0.08) loss to $0.11 profit, driven by sales flow-through and incremental interest income from the now higher cash balance.

For FY24E, the analyst maintained a top-line estimate at $237.4 million, driven by maintained comp and new unit development estimates.

Long lowered FY24 EBITDA estimates from $12.3 million to $10.8 million, citing higher G&A targets.

The analyst raised FY24 adj. EPS from $0.23 to $0.33 driven by incremental interest income from the now higher cash balance.

Price Action: KRUS shares are trading higher by 17.85% to $100.47 on the last check Friday.