Update (10:00 a.m.): Updated with Wednesday market open information.
NEW YORK (TheStreet) -- Jefferies raised its target price on Jack In The Box (JACK) to $62 and set a "buy" rating. The firm noted that accelerating sales and margin, combined with cost synergies, should increase operating results.
"We believe JACK can be worth $100 in 3-4 yrs as it realizes above-trend EPS growth via continued momentum at JIB; remaining cost synergies; and importantly, accelerating sales & margins at Qdoba, which we think is being underappreciated at its current implied valuation of 5.5x C14E EBITDA," Jefferies wrote in a research note. "As operating results improve, Qdoba will become a larger portion of the enterprise & should garner a higher multiple (Fast Casual avg 14-15x)."
The stock was rising 1.84% to $53.67 shortly after the market opened on Wednesday.
Separately, TheStreet Ratings team rates JACK IN THE BOX INC as a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate JACK IN THE BOX INC (JACK) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, increase in net income, notable return on equity and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 25.58% and other important driving factors, this stock has surged by 75.55% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, JACK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- JACK IN THE BOX INC has improved earnings per share by 25.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, JACK IN THE BOX INC increased its bottom line by earning $1.84 versus $1.52 in the prior year. This year, the market expects an improvement in earnings ($2.25 versus $1.84).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 83.0% when compared to the same quarter one year prior, rising from $12.48 million to $22.83 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, JACK IN THE BOX INC's return on equity exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: JACK Ratings Report