NEW YORK (
) -- Shares of
P.F. Chang's China Bistro
tumbled Thursday with volume running more than six times the usual level as Wall Street did some fretting over its projections for the company's third-quarter performance.
The restaurant stocks in general were weak, but the 4% sell-off in P.F. Chang's was more pronounced than most, and the stock was down almost 9% at one point. Volume of nearly 3 million compared to the issue's trailing three-month daily average of less than 500,000, and was heaviest day of trading for the stock since late April.
Piper Jaffray analyst Nicole Miller Regan, who reiterated her overweight rating on the stock during the session, attributed the move to "noise" on Wall Street about how the third quarter is shaping up, but told
she's very comfortable with her estimates for earnings per share of 45 cents in the third quarter, $1.96 in fiscal 2010, and $2.20 in fiscal 2011 .
The "noise" that Regan was referring to seems to have been speculation that a sell-side analyst traveling with the P.F. Chang's management on Thursday had lowered earnings estimates for the company, which doesn't provide quarterly guidance on earnings or sales.
Allison Schulder, director of investor relations & corporate compliance with P.F. Chang's, confirmed that Sharon Zackfia, an analyst with William Blair was traveling with management Thursday, but told
she wasn't aware of a change in the company's outlook.
"Perhaps people were reacting to that
the speculation, but to my knowledge management has not said anything," Schulder said via email.
Zackfia cleared the air in a short phone interview after the closing bell, saying "we haven't done anything" but adding that she's still in the process of evaluating the meeting and that she would likely issue a note on it at some point.
Buckingham Research, however, did tweak its estimate for the Scottsdale, Ariz.-based company's third-quarter operating profit during Thursday's down session, going to 46 cents a share, a penny below its prior view, following its own conversations with the management.
The firm, which is still above the current 45 cents a share consensus for the third quarter, cited the timing of promotions at P.F. Chang's Pei Wei Asian Diner locations for the estimate adjustment, and made clear it remains bullish on the stock.
We reiterate our buy rating on -4% correction today as The Bistro comps turned positive for the first time since March 2008 -- exposure to business activity seems to be getting traction & Pei Wei fundamentals are healthy which is driving management's decision to accelerate unit growth in 2011," Buckingham said.
In her research note, Piper's Miller Regan lifted her estimate for third-quarter same-store sales for the company's main Bistro concept to a increase of 2% from a prior view for a flat performance, and backed a price target of $51 on the stock, saying this represents a 23X multiple on her fiscal 2011 EPS view.
"With approximately 30% of transactions tied to corporate spending, we believe ongoing improvement in travel metrics bodes well for the Bistro, leaving us incrementally confident in our new SSS
same-store sales expectations," wrote Regan, who is expecting earnings of 45 cents a share in the September period on revenue of $305.3 million.
P.F. Chang's is slated to report its third-quarter results on Oct. 27. Wall Street sentiment on the company is split with only 12 of the 22 analysts following the stock at strong buy (7) or buy (5) with the breakdown of the rest being seven holds, two underperforms and a single sell. The median 12-month price target is $51.
Even with Thursday's pullback, P.F. Chang's shares are up 26% year-to-date, and at least some of the selling was likely profit-taking by skittish investors who have seen the shares surge since the beginning of September.
Through Wednesday's close at $47.74, the stock was up 10.3% from its finish at $42.80 on August 31, and its near-term intraday high of $48.37 on Sept. 10 was just a nickel below a 52-week peak of $48.43 on April 12. On Thursday, the stock scraped a low of $43.67, but managed to stay above 50-day and 200-day moving averages of $43.56 and $43.64, respectively.
Some nervousness about the estimate may be justified as P.F. Chang's has come in below Wall Street's consensus view in three of the last four quarters. It missed by only 1.3%, however, last time around, reporting a profit of $12.8 million, or 55 cents a share, when analysts were looking for earnings of 56 cents.
Written by Michael Baron in New York.
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