William Blair analyst Sharon Zackfia has maintained their neutral stance on LOCO stock, giving a Hold rating on October 24.
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Sharon Zackfia has given her Hold rating due to a combination of factors influencing El Pollo Loco’s performance. The company’s third-quarter adjusted earnings per share exceeded expectations, driven by improved restaurant-level margins and favorable general and administrative expenses. However, systemwide comparable sales saw a slight decline, with company-owned locations experiencing a minor increase in traffic but a decrease in average check size.
Despite the introduction of new menu items like quesadillas, which have been well-received, the overall sales mix was negatively impacted by increased discounting efforts. These efforts included app-only offers and third-party delivery promotions aimed at boosting traffic. While recent trends show a positive turn in systemwide comparable sales in the fourth quarter, the overall outlook remains cautious, justifying the Hold rating.
In another report released on October 24, TR | OpenAI – 4o also downgraded the stock to a Hold with a $10.00 price target.