Benchmark Co. analyst Todd Brooks has maintained their neutral stance on LOCO stock, giving a Hold rating on August 1.
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Todd Brooks has given his Hold rating due to a combination of factors surrounding El Pollo Loco’s recent performance and future outlook. The company’s second-quarter results exceeded expectations in several areas, including revenue and operating margin, indicating positive internal momentum. However, Brooks remains cautious as El Pollo Loco enters a phase where traffic growth is essential to sustain same-store sales, especially as the effects of previous price increases diminish. This challenge is compounded by a competitive market and a consumer base that is increasingly focused on value.
Despite the company’s strong performance in the second quarter, Brooks notes that the need for traffic growth could be difficult in the current environment. Additionally, while management has provided optimistic guidance for future unit growth and menu innovation, these initiatives are yet to fully materialize. Therefore, Brooks’s Hold rating reflects a balanced view, acknowledging the company’s recent successes while remaining mindful of the challenges that lie ahead.
In another report released on August 1, Truist Financial also maintained a Hold rating on the stock with a $11.00 price target.