Fogo de Chao, Inc. (NASDAQ: FOGO) did not exactly get the greatest reception from its analysts who work for firms in its underwriting syndicate after its initial public offering. In fact, even the bullish analyst calls just did not feel all that bullish.
Source: Fogo de Chao IPO Filing
24/7 Wall St. worried at the launch whether or not the investing public needed to endorse yet one more public food chain. That worry remains today.
Fogo de Chao was a small number of shares at the IPO with more than 4 million shares. It priced at $20 per share, after an expected price range of $16 to $18 per share. Shares were at almost $23.50 before the analyst quiet period ended (pertaining to underwriting firms that is), but the stock has come off its peak.
On the first day of trading Fogo de Chao closed up almost 25% at $25.75, and shares ticked up to $26.19 the second day — and they trend has been lower since.
Again, the analyst summary just was not that impressive. Here is a brief summary of the analyst calls here.
- Credit Suisse – started as Neutral with a $24 price target;
- Deutsche Bank – started as Hold with a $22 price target;
- Jefferies – started as Buy with a $28 price target;
- J.P. Morgan – started as Neutral with a $24 price target;
- Piper Jaffray – started as Overweight with a $27 price target;
- Wells Fargo – started as Outperform.
Credit Suisse seems to be the most middle ground company here in the call. its rating was Neutral, but it still left some upside to the current price. Credit Suisse notes included the following summary, which is not verbatim from their summarized report:
Fogo de Chão could potentially quadruple the current store base over time, driving double-digit unit growth for years to come and placing it among the industry’s best growth stories…. Its labor model offers a unique advantage — Valuation is our key concern. At 13.6x ’16E EV/EBITDA, FOGO trades at a substantial premium to peers and the industry overall.
Fogo de Chao shares closed down 3.4% at $22.64 on Tuesday. It has a post-IPO trading range of $21.00 to $27.19.
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