Is Burger King (BKC) -- downgraded on Friday by Citi analysts -- on the verge of losing its paper crown?
Citi analyst Gregory Badishkanian said as much in a note on Friday, in which he downgraded the stock to hold from buy. He noted that same-store sales throughout the month have likely moderated to negative mid-single digits in late April into early May.
Badishkanian said the slowdown is mostly attributable to sluggish breakfast business and competitive pressure on price.
, on the other hand, is expected to ride its current momentum through the rest of the year, CEO Jim Skinner said at the
There are, however, some positives for BK, which could benefit from deep June promotions and easy comparisons. Badishkanian also expects food inflation to moderate and the company's cost-cutting initiatives to benefit margins.
Badishkanian lowered U.S. same-store sales estimate to a 3% decline in the fourth quarter. He also reduced fourth-quarter and full-year earnings estimates to 33 cents and $1.38 cents, respectively. The company's target price was cut to $18 from $22 due to a lower target multiple.
Separately, on Thursday the company announced a quarterly cash dividend of 6 cents a share payable on June 26 to shareholders of record at the close of business on June 10.
Shares of the company were up slightly, by 1.6%, to $16.50 in morning trading.
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