Zacks Investment Research upgraded shares of Panera Bread Company (PNRA) from UNDERPERFORM to NEUTRAL on December 05, 2014, with a target price of $171.00.
We have reverted to a Neutral recommendation on Panera Bread from Underperform, based on the company's improved year-over-year earnings, revenues and comps growth. Despite missing the Zacks Consensus Estimate, both earnings and revenues increased year over year reflecting comps growth. The company also raised the lower end of its comps guidance for 2014, reflecting the comps growth. In our view, the Panera 2.0 program has begun yielding results, with improved revenues and comps. However, we are concerned that the company is spending heavily to improve operational capabilities, enhance guest experience and strengthen the overall position. Additionally, rising food costs that have affected the restaurant industry at large would further dent Panera's margins.
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