NEW YORK (TheStreet) -- Deutsche Bank initiated coverage on Fogo de Chao (FOGO) stock with a "hold" rating and a $22 price target.

The Brazilian-style steakhouse chain has the potential to grow in international markets and strong operating margins, Deutsche Bank said in an analyst note.

Fogo de Chao opened a location in Mexico City and plans to enter the Middle East later this year or in early 2016, the firm added.

The company has 24 locations in the U.S. but has the potential to increase to about 100 units, according to analysts.

Additionally, Fogo de Chao has the opportunity to grow with lunch offerings, bar menus and add-on products, analysts noted.

Fogo de Chao also has a low cost structure with its labor model, which consists of chefs also working as servers, Deutsche Bank said.

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Valuation and concerns over emerging markets, however, led analysts to the modest rating for the casual restaurant chain.

Shares of Fogo de Chao were down 2.73% to $22.80 in mid-morning trading on Tuesday.

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