Oppenheimer analysts said that Denny's (DENN) - Get Report stock is a grand slam in an initiation note Thursday that placed an outperform rating and $27 price target on the stock. 

The price target represents a potential 20% upside from the stock's previous closing price of $22.59. 

The firm says that the breakfast restaurant chain is undercovered by Wall Street analysts despite offering a compelling investment story. 

"Its transformative refranchising initiative unlocks significant capital returns, elevates its free-cash-flow profile and improves the unit growth outlook," analyst Micahel Tamas wrote. 

The company's already strong same-store sales trend, a 1% increase over the last three years that "significantly outperforms" its peers, could accelerate to between 1.5% and 2%, thanks to menu innovation and food takeout strategies, according to Tamas.

Oppenheimer is bullish on Denny's despite the fact that the stock is up 59% since October 2018 because the firm is "positive on the upside potential from the model transformation and strengthening earnings growth."

Tamas estimates that Denny's could see earnings increasing at a 14% compound annual growth rate through fiscal 2021. 

Denny's shares closed Thursday's session up 1.99% to $23.04.