NEW YORK -- Stable costs, menu price increases and a shift to selling wings by the pound are making analysts more optimistic on shares of Buffalo Wild Wings Inc.
A Wedbush analyst on Friday raised his rating for Buffalo Wild Wings to "Outperform" from "Neutral," and lifted his price target on the company by $22 to $100. The analyst, Nick Setyan, said the restaurant chain could post better results than analysts expect in the second half of the year.
Even as the chain has raised menu prices, he expects televised sports events to keep drawing in customers. On the cost front, an expected increase this quarter in costs for wings hasn't taken place, he said. He also lauded the company's experiment with selling wings by the pound rather than by the piece. That should lower costs because Buffalo Wild Wings buys its wings from suppliers by the pound and those suppliers are shifting toward larger birds and larger wings, he said.
Also on Friday, Sterne Agee analyst Lynne Collier backed her "Buy" rating for the company, saying that consumers in test markets don't seem to mind the change to by-the-pound chicken wings sales. She said that if the move is successful over the next three to four months, it could be expanded to the entire chain, which would increase profitability and result in better-than-expected profits next year.
Shares of Buffalo Wild Wings rose $1.74, or 2 percent, to $88.97 in premarket trading.