Einstein Noah shares rise
Wednesday, July 18, 2007 14:28ET
By Staff Reporter
NEW YORK, Jul 19, 2007 (AP via COMTEX) -- Shares of bagel chain operator Einstein Noah Restaurant Group Inc. rose Wednesday after three analysts initiated coverage on the stock with their highest ratings.
Piper Jaffray analyst Nicole Miller Regan gave the shares an "Outperform" rating with a $22 price target.
Regan said in a note to investors the chain of bagel stores has "established itself as a leader within the bagel segment of the premium-convenience marketplace."
She noted that the company is expected to more than double its restaurant base with a "national development approach."
Morgan Stanley analyst Mark Wiltamuth also launched coverage on the shares with an "Outperform" rating and a $23 price target, saying the shares were undervalued.
Wiltamuth said in a client note the chain has already managed a turnaround and that "near-term earnings results could impress."
He added that earnings could grow by 54 percent in the next three years.
Wiltamuth also said although casual dining operators have struggled recently as consumers strapped by a slow housing market and high gas prices balk at spending money, Einstein's cheaper options may offer some insulation.
"While we believe all restaurant operators are feeling some pressure from the macro environment, we believe Einstein's low average check (under $7), new menu additions, remodeling, extended hours and other initiatives should help the company keep ... momentum up," he said.
Cowen & Co. analyst Paul Westra initiated coverage with an "Outperform" rating and said in an analyst note that the shares should be able to outperform the market by more than 25 percent over the next year.
The stock began trading on the Nasdaq June 8 after it completed a public offering of 5 million shares. Before that, it traded on the Pink Sheets.
Shares climbed 56 cents, or 3 percent, to $18.84 in afternoon trading.
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