2 Ways Buffalo Wild Wings Could Still Win After Q1 Disappoints

Buffalo Wild Wings BWLD disappointing earnings report and guidance doesn't imply the restaurant chain is down-and-out, at least according to UBS analyst Dennis Geiger.

The company's earnings report certainly highlights its challenges and the need for a strategic turnaround plan, according to Geiger. Thankfully for investors, the analyst believes there are "multiple ways to win" moving forward. Specifically, management's margin expansion game-plan could create a scenario for improved profitability as early as next year, although this does assume "solid execution" moving forward.

In fact, the company needs to perform in light of management's reduced same-store sales guidance from 1-2 percent to just 1 percent. The analyst noted the entire restaurant sector could be hurt by slower industry-wind trends.

Nevertheless, Geiger remains confident Buffalo Wild Wings' brand will remain relevant and the analyst is now modeling a same-store sales growth of 1.1 percent, a reduction from a prior 1.3 percent estimate but still above management's own outlook.

Other 'Win'

Geiger believes another way for Buffalo Wild Wings to win is through proposals from activist investor and major shareholder Marcato Capital. The activist investor and 6.1 percent stakeholder has been pushing for a change in the most senior executive, the company's CEO Sally Smith although the analyst's note didn't present any insight as to any other strategies available.

Geiger maintained a Buy rating on Buffalo Wild Wings with an unchanged $185 price target.

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