PTLO - Portillo's stock rallies after Stifel turns bullish on near-term upside

2023-03-20 09:51:16 ET

Portillo's ( NASDAQ: PTLO ) broke higher in early trading on Monday after Stifel upgraded the restaurant stock to a Buy rating from Hold and assigned a 12-month target price of $24.

Analyst Chris O'Cull and team have taken a more constructive stance toward the company's outlook.

"We believe the stock's pullback since our last update has created a compelling entry point for growth investors. Our Buy thesis reflects our view that investors will begin recognizing the brand's portability and development potential as new restaurants consistently execute successful openings and retain high volumes in new markets."

O'Cull believes there are ongoing opportunities for the restaurant company to capture operational efficiencies at the store-level and for additional leverage to occur as the company penetrates its growth markets. Stifel said it remains comfortable with SRS and EBITDA estimates on the restaurant stock, and believes the current valuation (~21x NTM EBITDA) is a compelling entry point for a business that is capable of delivering at least low-teens EBITDA growth over time

Shares of Portillo's ( PTLO ) broke 4.10% in early trading to $21.38 on Monday and have recovered more than half of the drop seen since the company priced an offering of 8M shares at $21.05 per share on March 8.

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