Jack in the Box Rallies on Jana's 'Undervalued' Nod

Hedge fund Jana Partners disclosed a new stake in the Qdoba parent

Feb 16, 2018 at 11:49 AM
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Fast food stock Jack in the Box Inc. (NASDAQ:JACK) is rallying today, after Jana Partners disclosed a 7.3% stake in the company. According to an SEC filing, the hedge fund believes JACK shares are undervalued, and has held discussions with management regarding its capital structure and allocations, margins, operations, and franchise mix. Going forward, Jana may "take other steps to increase shareholder value," and may weigh in with management regarding JACK's governance and board composition.

JACK is up 4.7% at $89.67, extending a recovery from its Feb. 9 annual low of $79.30. Today's surge has the stock on track to close above its 20-day moving average for the first time since Dec. 19, and JACK is also pacing for its biggest weekly percentage gain since May 2016.

Some of today's gains could be the result of short sellers rushing to cover. Short interest accounts for 6.3% of JACK's float, which translates into 2.6 days' worth of potential buying power, at the equity's average daily trading volume.

Elsewhere, however, analysts seem unimpressed. Cowen and Company this morning cut its price target on the stock to $94 from $99, while Oppenheimer lowered its target to $115 from $125.

Today's flurry of news for Jack in the Box precedes next week's fiscal first-quarter earnings report, which is due out after the market closes on Wednesday, Feb. 21. Looking back over its past eight quarterly reports, JACK has managed a next-day gain on six occasions, with an average post-earnings daily price move of 8.4%.

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