Investing.com-- Stifel analysts have upgraded their rating on Jack In The Box Inc (NASDAQ: JACK ) to "Buy" from "Hold" and raised their price target, citing the appointment of new CEO Lance Tucker as a positive step.
Stifel raised its PT on the stock to $35 from $32, citing the company’s efforts to strengthen its financial position and focus on a more streamlined strategy, with plans to reduce debt by over $300 million in the next 12-18 months.
Key initiatives include selling some of the company’s restaurant real estate, eliminating its quarterly dividend, and divesting Del Taco, analysts noted.
These moves, alongside the closure of 150-200 underperforming units, should help the company improve its competitive positioning and free up capital for more profitable investments, according to Stifel.
Analysts estimated that the reduction in debt and financial leverage will lead to a lower risk profile, with the company’s leverage potentially falling to below 5x by fiscal year 2026.
Despite recent declines in same-store sales, Stifel sees upside potential if Jack In The Box can improve its comparable sales and execute its plans effectively.
"We believe the equity value will improve as debt is repaid. Additionally, the valuation should benefit from the company owning a single, highly franchised brand with a focus on growing comp sales," analysts added.