In a report released yesterday, Jon Tower from Citi maintained a Sell rating on Cracker Barrel, with a price target of $20.00.
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Jon Tower has given his Sell rating due to a combination of factors impacting Cracker Barrel’s performance. The company has experienced a significant decline in customer traffic, partly due to a controversial logo change, which has led to a reduction in their fiscal year guidance. This downturn in traffic, approximately 11% down in the most profitable quarter, has prompted Cracker Barrel to implement tactical sales promotions that may negatively impact profitability in the short term.
Furthermore, operational challenges have arisen as the company had to revert to previous processes after new back-of-house initiatives failed to be executed effectively. Cost-saving measures, including reduced advertising spend and general administrative cuts, are also expected to affect traffic and overall performance. Consequently, Jon Tower has adjusted earnings estimates downward and revised the price target, reflecting a potential 25.9% decrease in share price return.
Tower covers the Consumer Cyclical sector, focusing on stocks such as Cracker Barrel, Brinker International, and Domino’s Pizza. According to TipRanks, Tower has an average return of 12.5% and a 60.26% success rate on recommended stocks.
In another report released on December 5, Bank of America Securities also reiterated a Sell rating on the stock with a $34.00 price target.