Jack In The Box (JACK – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Christine Cho from Goldman Sachs maintained a Sell rating on the stock and has a $40.00 price target.
Christine Cho’s rating is based on a combination of factors, despite Jack In The Box reporting better-than-expected earnings for the first quarter of fiscal year 2025. The company managed to exceed earnings estimates primarily due to lower costs of goods sold and reduced general and administrative expenses. However, total revenue fell slightly short of expectations, and there was a noticeable decline in same-store sales growth at Del Taco, alongside a decrease in net unit growth.
Looking ahead, the outlook for the second quarter appears challenging, with management anticipating negative same-store sales growth. The recent departure of the CEO and the interim appointment of the CFO as CEO adds to the uncertainty. Additionally, the company plans to reduce capital expenditures and share repurchases, focusing instead on debt reduction. Despite plans to expand into new markets and drive growth through franchisees and menu innovation, the company remains a ‘show-me’ story, requiring further evidence of sustainable improvement before a more favorable rating can be considered.