Buffalo Wild Wings, a Minneapolis-based casual dining restaurant chain, experienced a recent stock upgrade when an analyst mentioned that the franchise's expenses should decrease due to high corn harvest.
Economist Stephen Millar of Miller Tabak boosted the company, recovering from turbulent drops in stock due to rising wing prices, from a "Hold" status to a "Buy" status last Wednesday.
"Buffalo Wild Wings shares have fallen 21% from their early summer high and 10% year-to-date as wing prices have risen, but we expect the recent wing-price increase to be reversed in the next couple of quarters amid ample wing supplies and corn-feed prices at four-and-a-half year lows," Miller Tabak writes in its analysis of the company.
"We contend this, along with the combination of mid-single-digit same-restaurant sales growth, solid unit expansion, modest upside from Buffalo Wild Wings' emerging brands, and the potential addition of share buybacks will sustain earnings-per-share growth in the 20%-25% range through 2016."
Other economists have suggested that Buffalo Wild Wing's mid-summer flop could also be attributed to rising competition within the chicken wing market. This is coupled with reports that cheap access to the poultry market has become increasingly rare.
Buffalo Wild Wings is expected to rebound to the 2014 high and the overall costs of wings is expected to decline, creating more favorable conditions for the company's growth.
Buffalo Wild Wings has not released a statement addressing the recent announcement of its stock share upgrade.
