Wingstop to Capitalize on a Post-COVID Acceleration in Digital/Delivery Adoption

According to analysts at Wedbush, Wingstop Inc’s (NASDAQ:WING) business model is among the best positioned to capitalize on a post-COVID acceleration in digital/delivery adoption in the near-, medium-, and long-term.

The analysts’ checks through early September point to Q3 SSS growth in the 6% to 8% range, or 33.0-35.5% range on a 2-year basis, above 4.9% consensus year-over-year and consistent with Q2 2-year SSS growth of 34.7%. Notable takeaways include the continued strength in digital orders and the recovery of dine-in traffic.

Wedbush increased its price target on the company’s shares to $205 from $180, maintaining its outperform rating.

Despite the solid domestic top line trends, the brokerage mentioned that international (Mexico, Indonesia) has underperformed through 2021, pressuring the overall royalty rate. As a gradual normalization in these intl. markets occurs, helped by continued growth in the UK and entry into Canada, the analysts expect a gradual return to the ~10 bps of year-over-year growth in the underlying royalty rate.