The firm also raised its price target for the bakery cafe to $215 from $185.
Wedbush listed national marketing and strong same store sales (SSS) index growth as reasons for the upgrade.
"We are upgrading Panera Bread to OUTPERFORM from NEUTRAL given our expectation for upside to modest 2014 consensus estimates, despite meaningful investments ahead based on checks indicating strong Q1 SSS growth; our belief that national marketing, Panera 2.0 and catering initiatives are poised to sustain sales lifts ahead of expectations; and share repurchases ahead of expectations," said Wedbush.
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Separately, TheStreet Ratings team rates PANERA BREAD CO as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate PANERA BREAD CO (PNRA) 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 revenue growth, growth in earnings per share, notable return on equity, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 3.5%. Since the same quarter one year prior, revenues rose by 15.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- PANERA BREAD CO has improved earnings per share by 12.0% 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, PANERA BREAD CO increased its bottom line by earning $6.82 versus $5.89 in the prior year. This year, the market expects an improvement in earnings ($6.93 versus $6.82).
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, PANERA BREAD CO's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Net operating cash flow has significantly increased by 95.66% to $136.91 million when compared to the same quarter last year. In addition, PANERA BREAD CO has also vastly surpassed the industry average cash flow growth rate of -32.46%.
- You can view the full analysis from the report here: PNRA Ratings Report