Wilsons overweight on Guzman y Gomez
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The news: Analysts at Wilsons Advisory have turned bullish on Mexican-themed fast food chain Guzman y Gomez, citing prospects for sustained earnings growth by the company.
The numbers: Wilsons has initiated coverage on the stock with a 12-month price target of $31.98 and an ‘Overweight’ rating.
Shares in the company were up 0.4% to $29 in early trading, but are down nearly 4% since debuting on the ASX last month.
The context: Wilsons’ analysts said their positive outlook on GYG was underpinned by its very attractive unit economics, the popularity of Mexican-inspired food in Australia and GYG’s well-funded status that would enable a rapid store rollout program.
They cited near-term softness in consumer spending and a lack of a medium-term pipeline of sites for store openings as potential risks that could weigh on its performance. Earlier this month, brokerage Morgans also outlined a bullish outlook for the fast food chain.
What they said: “GYG has established a domestic store network with very attractive unit economics and sufficient scale to support expectations of a significant and successful full store rollout. GYG is well-funded and well-resourced to pursue this strategy,” Wilsons analysts said in a note.
The source: Wilsons research
