Wendy's Stock Draws More Positive Reviews From Wall Street

Wendy's restaurant peers Red Robin and Wingstop just reported earnings

Josh Selway
Feb 23, 2018 at 9:27 AM
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Fast food stock Wendy's Company (NASDAQ:WEN) will try to extend its upward momentum today after the shares jumped 4.1% yesterday on a well-received quarterly update. WEN is facing off against a round of mixed analyst attention, though. While BMO upped its price target on the stock to $20 from $17 this morning, SunTrust Robinson trimmed its target to $21 from $22. Of course, this latter mark still represents territory not seen since early 2007. As of yesterday's close 10 of 15 covering analysts had "strong buy" ratings in place on the equity.

Short Sellers Move In On WEN Stock

The shares were last seen trading at $16.88, not far from their Jan. 10 decade-plus high of $17.66. Overall, Wendy's is up 23.3% during the past year. The stock saw strong support from the 200-day moving average during the recent market turbulence.

But many are skeptical the security's technical success can continue. Specifically, short interest increased by 10% in the last two reporting periods, and almost 15% of WEN's float is now controlled by these bearish traders. Based on average daily trading volumes, it would take almost two weeks for short sellers to cover -- suggesting there's potential for the stock to benefit from a short-squeeze. 

Restaurant Stocks RRGB and WING Diverge Post-Earnings

Fellow restaurant stocks Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) and Wingstop Inc (NASDAQ:WING), meanwhile, are both making notable post-earnings moves today. RRGB shares are trading up 3.5% at $55 after the company posted a fourth-quarter earnings beat. WING on the other hand is sliding 8.1% to trade at $43, with duel price-target cuts from Wedbush and Barclays coming in after yesterday's earnings release. Earnings for the fourth quarter were better than expected but Wingstop's forecast fell short of estimates.

Like Wendy's, Red Robin and Wingstop are both heavily shorted. Almost one-third of RRGB's float is sold short, while short interest accounts for 23.5% of WING's float.


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