William Blair analyst Sharon Zackfia has maintained their neutral stance on LOCO stock, giving a Hold rating on July 29.
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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 reported a 9% increase in second-quarter adjusted EPS, surpassing both consensus and internal estimates, primarily due to improved restaurant-level margins and favorable general and administrative expenses. However, systemwide comparable sales saw a slight decline of 0.3%, with company-owned locations experiencing a modest increase while franchised locations declined.
Despite efforts such as a rebranding campaign and the introduction of new value-oriented menu items, which helped improve traffic by the end of the quarter, the start of the third quarter showed a decline in systemwide comparable sales. July’s performance fell short of expectations, with a decrease in both company-owned and franchised locations, leading to a cautious outlook. These mixed results and uncertainties in sustaining growth momentum are likely reasons for the Hold rating.
In another report released on July 29, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $11.50 price target.