Wingstop shares tumbled nearly 8% on Wednesday after another Wall Street analyst slashed his price target, adding to concerns about weakening demand at the chicken-wing chain ahead of its quarterly earnings report next week.
The stock traded at $120 at Wednesday's close, extending its year-to-date decline to 50%.
In a Tuesday note to investors, StoneX analyst Todd Brooks cut his price target to $185 from $245, while maintaining a Buy rating. The new target is slightly below Wall Street's average of $192, according to analysts polled by FactSet.
Brooks warned that the third quarter has been particularly challenging for fast-food chains serving lower-income customers, who have been pulling back on spending. Domino's Pizza recently said customers were ordering fewer items per transaction at its restaurants.
Wingstop introduced more value-priced offerings during the quarter, but Brooks questioned whether bundled meals would be enough to attract budget-conscious customers as rivals stepped up their discounts.
The analyst modestly reduced his 2026 and 2027 earnings forecasts. More significantly, he cut the valuation multiple used to calculate his price target to 20 times forward adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda), from 25 times previously.
StoneX is hardly alone in turning more cautious.
Earlier this month, Citi's Jon Tower lowered his target to $191 from $208, Morgan Stanley's John Glass cut his to $202 from $238, and UBS's Dennis Geiger reduced his to $140 from $160. All three maintained their existing ratings. Baird also lowered its target to $160 from $200.
Wall Street outlook for Wingstop has been deteriorating for months. In January, analysts' average price target stood around $328, according to FactSet. Recent estimates near $192 represent a decline of approximately 41%, broadly tracking the stock's nearly 50% slide this year.
Wingstop's financial results illustrate why investors are nervous.
Second-quarter revenue increased 6.4% from a year earlier, while adjusted earnings rose to $1.18 a share from $1. But those gains were driven largely by restaurant expansion rather than stronger demand at existing locations. Domestic same-store sales plunged 7.5%.
Wingstop has responded with promotions including 30 wings for $30, new flavor offerings, and the nationwide launch of its Club Wingstop loyalty program. It is also investing in technology to improve restaurant operations.
Wingstop said during its second-quarter earnings call that its 30-wings-for-$30 promotion helped customers spend nearly 17% more per order when ordering directly from the chain, although that hasn't yet translated into a broader recovery in same-store sales.
Wingstop will report third-quarter results before the market opens on Oct. 28. Wall Street expects domestic same-store sales to decline 2.5% from a year ago, according to FactSet. That is a significant improvement from the 7.5% drop in the second quarter and 8.7% decline in the first.
It is worth noting that Wall Street's near-term earnings expectations for Wingstop have remained largely unchanged since January.
That means the decline in analysts' price targets largely reflects growing skepticism about the company's long-term growth prospects, with investors increasingly unwilling to pay a premium for Wingstop shares as sales at existing restaurants continue to weaken.
Based on their average price targets, analysts now implicitly value Wingstop at about 40 times expected earnings, down from 70 times in January. Even so, that remains well above the 23 times earnings investors are currently paying in the market.
FactSet consensus suggests that analysts expect Wingstop's same-store sales to start growing again in 2027. Management hasn't provided guidance for next year.
Investors will be watching next week's earnings report for signs that the sales slump is easing -- -- or more downward revisions might be coming.
