Oppenheimer Raises Jack In The Box Price Target To $91

Oppenheimer has raised the price target of Jack in the Box Inc. (NASDAQ: JACK) to $91 from $86 after its bullish thesis got a boost after the company's investor meeting. The new price target implies an upside of 15 percent from Wednesday's close.

"Re-franchising and G&A changes are more EPS-accretive than expected, which may begin a powerful revision cycle. If the stock's sum-of-parts is under-appreciated after restructuring, the board is open to Qdoba alternatives," analyst Brian Bittner wrote in a note.

Bittner, who has an Outperform rating on the stock, said the combination of re-franchising and G&A cuts is $0.56-0.78 accretive, triggering Street EPS revisions.

Meanwhile, the analyst noted that JACK still sits at a significant valuation discount to peers (20-30 percent on average) and this is as earnings estimates are moving higher, creating an "attractive risk/reward into several unique catalysts."

After re-franchising (starting in fiscal 2018), JACK expects mid-teens EPS growth. JACK also targets $400 million plus EBITDA versus $290 million in fiscal 2015 and 4x debt-leverage versus current 2.9x.

Other long-term targets include 2.5-3.5 percent same store sales at JITB, 4-5 percent at Qdoba; 10-12 percent unit growth at Qdoba, 1-2 percent at JITB.

"We are attracted to JITB's SSS setup because 2-year comp and share gains recently accelerated as one-year comparisons now significantly ease. This is as most peers' comparisons toughen," White added.

The analyst also raised his '17E EPS view to $4.29 from $4.04 and said his estimates are "conservative."

Shares of JACK rose 5.5 percent to $83.39.