Wingstop's Strong Unit Economics - Goldman Sachs Upgrades Stock

Goldman Sachs analyst Christine Cho upgraded Wingstop Inc. WING to Buy from Neutral, lowering the price forecast to $377 from $458.

According to the analyst, Wingstop's new multi-year partnership with the NBA, making it the Official Chicken Partner of the NBA and NBA G League, serves as a clear catalyst to boost brand awareness and drive further growth.

Despite strong fundamentals, including best-in-class returns and growth, the stock has fallen 25% over the past month (while the S&P rose 3%).

According to Cho, this decline follows a cost-driven miss in the third quarter and concerns from investors about potential deceleration in same-store sales growth (SSSG) for FY25, given tougher year-over-year comparisons.

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On October 30, the company reported third-quarter results, with system-wide sales rising 39.4% to $1.2 billion. However, the analyst projects a 7% SSSG in 2025, which would represent about 150 basis points of upside versus the Visible Alpha consensus, driven by continued brand awareness growth, digital transformation, and increased customer frequency.

Cho remains bullish on the company, highlighting its ability to deliver strong multi-year same-store sales growth, consistent double-digit unit expansion (both domestically and internationally), and sustainable EBITDA growth, all underpinned by a largely franchised model.

These factors align with the key pillars of the analyst’s Restaurant Industry Framework, Cho highlights.

This apart, Cho forecasts that strong franchisee unit economics and profits will pave the way for mid-teens unit growth over the next few years. Management has recently raised its long-term unit expansion targets to 6,000 units in the U.S. and 10,000 units globally, representing 2.7X and 4X growth from its current footprint, respectively.

Price Action: WING shares are trading higher by 1.84% to $338.00 at last check Friday.

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