Shares of Buffalo Wild Wings shed about 3.5 percent on Tuesday after analysts disclosed that they were "cautious" ahead of the company's fourth-quarter earnings due to expected soft same-store sales growth.
"Buffalo faces intensifying competition from concept replication, a lapping of lower gas prices, declining NFL viewership, fading offline footfall and a widening away versus at-home food inflation gap that will likely continue to pressure comps in 2017," Jeremy Scott, an analyst with CLSA, wrote in a research note Tuesday.
Scott downgraded the stock to sell from underperform and lowered his full-year 2016 EPS estimate 1 cent to $5.57.
It is likely that Buffalo Wild Wings will also fall victim to weather-related headwinds in the quarter, as both December and January same-store sales industrywide are expected to be poor, according to Mark Kalinowski, a Nomura-Instinet analyst.
December is slated to be the only month in 2016 where the industry as a whole showed negative same-store sales growth. However, Kalinowski noted that November sales, which were the second-best month for U.S. chain restaurant same-store sales during 2016, "should prevent Q4 as a whole from being a disaster."
Jeremy Hamblin, an analyst with Dougherty & Co., is concerned that the company will not be able to "rise above the fray." He lowered his EPS estimates for Buffalo Wild Wings 5 cents to $1.27 per share.
"We believe Buffalo Wild Wings could miss on sales for an 8th straight quarter as traffic trends continue to be challenged despite increased promotional activity," he wrote in a research note Tuesday.
Buffalo Wild Wings is slated to report fiscal fourth quarter earnings on Feb. 7 after the closing bell.