The downgrade came after the Reddit crowd helped push the stock up 26% to $28.87 last Tuesday. But the stock fell back to $24.14 at Friday’s close, making Sanderson more comfortable.
“Nothing last week changed our outlook or the fundamentals of the business,” Sanderson wrote in a commentary cited by Bloomberg. His store checks are “just as compelling as ever," Sanderson said.
Wendy’s business performance is ahead of expectations, sporting average weekly sales “as high as ever,” Sanderson noted.
Sanderson has a $30 price target on Wendy's.
Wendy’s recently traded at $24.51, up 1.53%. It has climbed 19% over the past three months, as it has achieved meme stock status.
TheStreet.com founder Jim Cramer said last Tuesday that while Wendy’s rally would likely be short-lived, he likes the name and says it reflects a new frontier for the WallStreetBets cohort.
"They cut their teeth with GameStop GME and AMC AMC, two heavily shorted stocks, but now they are spreading their wings with these new stocks, especially an institutional favorite, Wendy's, with a very low short position," Cramer wrote in a column for Real Money.
Stifel analyst Chris O’Cull downgraded Wendy’s last week to hold from buy after Tuesday’s surge, based on valuation. He kept his $25 price target.
At a recent Stifel-sponsored conference, O’Cull said "management struck a confident tone regarding the company's ability to hit its financial targets for 2021 and beyond.
O’Cull said he remained “constructive toward the company’s fundamental outlook.”