CREDIT SUISSE: A takeover will not save Buffalo Wild Wings (BWLD)


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  • Buffalo Wild Wings popped greater than 24% on reviews of a takeover provide from Roark Capital Group.
  • But the corporate’s future is not clear-cut, even when the takeover goes via.
  • The worth of rooster wings is at historic highs and is the root of deeper issues on the firm.
  • Watch Buffalo Wild Wings’ inventory worth transfer in actual time.

Buffalo Wild Wings has been struggling currently, with the inventory falling 5.43% within the final 12 months. But on Monday, reviews that the corporate had acquired a $150 per share takeover provide from Roark Capital Group despatched shares hovering by greater than 24%.

For buyers, a takeover might imply the beginning of a turnaround for the corporate, however Jason West, an badyst at Credit Suisse, thinks the corporate’s future is essentially out of its personal fingers.

“Key risks include failure of the acquisition, competitive discounting, and wing price trends,” West wrote in a observe to shoppers.

Even with the potential for a $2.three billion takeover provide from Roark Capital, the restaurant nonetheless has to promote lots of wings with engaging margins to show a revenue. The firm referred to as the value of rooster wings “historically high” in its third-quarter earnings outcomes, and introduced that it will be ending its widespread half-price wings promotion as a result of rising prices.

If Roark Capital completes a takeover of BWW, it could possibly be within the good place to choose the brand new CEO, and usher in a brand new plan to show across the firm, West stated. Roark could possibly be within the place to get better about $1 per share in earnings energy, however provided that “wing costs return to historical norms over time.” But it is laborious to foretell when rooster wing costs will drop, and present costs could possibly be a brand new regular, West stated.

The decline at Buffalo Wild Wings is not completely depending on the value of rooster wings. The whole informal eating sector has been hurting, which West stated is simply another excuse the corporate might proceed to slide regardless of a takeover.

West remained impartial on the corporate and has a worth goal of $120, which is about 17% decrease than the corporate’s present worth of $148.55.

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