Guzman y Gomez paces ASX 200 gains on RBC ‘outperform’ rating

The news: Shares in Mexican food chain Guzman y Gomez (GYG) rallied in afternoon trade after RBC Capital Markets upgraded the stock to “outperform” from “sector perform”.

Shares have risen 11.56% to $17.85 at 12:52pm AEST. It was the top performing stock on the ASX 200 at this time.

The context: RBC Capital Markets analyst Michael Toner said there is more to GYG than just comparable sales. Despite the stock tumbling 27% from its IPO price, Toner said restaurant openings underpin the larger share of GYG’s earnings growth. He sets the price target to $22.

He added that, while comparable sales growth is cyclical, GYG’s network expansion is largely resilient. He projects the company will deliver a 4.3% increase in sales growth for FY26 and 4.4% for FY27.