Analyst Double Upgrades BJ's Restaurants: Call Same Stores Sales, EPS Growth Outlook Conservative

Wedbush analysts Nick Setyan, Michael Symington and Matt Quigley double upgraded BJ's Restaurants Inc BJRI to Outperform from Neutral at a price target of $36.
They view BJRI's 2023 SSS Growth and margins as overly conservative and believe that Q1 SSS growth expectations are trending in-line with or above the consensus of 8.2% on increased pricing, improved staffing levels, and continued off-premise sales.
Analysts view unfavorable weather in California and staffing challenges at the store level as a matter of concern.
They increased Q1 2023 SSS growth expectation to 8.5% from 8.0% and project SSS growth in Q2 of 6% (vs. consensus of 4.4%), in Q3 of 4.9% (vs. consensus of 3.4%) and Q4 of 4.0% (vs. consensus of 3.8%).
Analysts also raised the margin estimate to 12.3% from 12.1% (vs. consensus of 12.2%) for Q1 2023 and 13.0% from 12.9% (vs. consensus of 12.9%) for 2023.
They believe margins in Q2 and the second half of 2023 to gain from management's ongoing cost-saving initiatives (around 200 bps across all restaurant-level expenses).
They expect all-in menu pricing in Q2 to reach 9.5% and anticipate continued pressure on category traffic. Analysts see Q2 traffic to be down 2.5% while expecting less pressure on traffic in Q4 (-2.0%) than in Q2 & Q3 (-2.5%).
They project slightly moderating pressure on the mix as the second half of 2023 progresses. Analysts believe that the new menu introduction by the company in July 2023 should drive an upside to its mix estimates in the second half of 2023.
Analysts increased the EPS estimate to $0.72 from $0.65 for 2023 (vs. consensus of $0.55) and maintained the EPS estimate of $1.22 for 2024 (vs. consensus of $0.99).
Price Action: BJRI shares are trading higher by 3.61% at $28.70 on the last check Tuesday.

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