Wingstop a Top Pick As Stock Initiated With $315 Price Target

Wingstop's stock (NASDAQ:WING) has given holders a difficult year in the markets, losing 38.18% over the past 12 months of trading. A bullish initiation of coverage could be just the boost that bulls were looking for, with this an indication that sentiment could be improving in the stock.

RBC Capital's initiation of coverage comes with an “Outperform” rating and a price target of $315, with Wingstop also making it onto RBC's top consumer and leisure picks. Also on the list following initiations include Cava Group (CAVA) Dutch Bros (BROS), and Life Time Group (LTH).

The market's initial reaction to the analyst's note has been positive, with the stock adding 0.5% in the pre-market to yesterday's 1.8% gain. Despite this, the initiation signals a potentially undervalued opportunity, especially considering the stock is down 14.74% year-to-date.

RBC Capital's bullish stance is underpinned by Wingstop's strong competitive positioning within the expanding chicken market. The firm highlights the company's distinct niche in wings, setting it apart from competitors, and its best-in-class franchisee returns on invested capital (ROIC) of about 70%.

While same-store sales growth has decelerated from the high-teens witnessed in fiscal years 2023 and 2024, RBC believes this slowdown is already factored into the stock's current valuation.

Recent analyst activity has painted a mixed picture. Morgan Stanley lowered its price target to $375 back in February, while maintaining an “Overweight” rating, reflecting a cautious near-term outlook. This followed a 21.2% decline in Wingstop's stock during February, triggered by the company's projection of slower same-store sales growth for 2025. However, Stifel maintained a “Buy” rating in September, albeit with a reduced price target of $375, citing robust revenue growth and a strong return on assets.

International Expansion To Fuel Growth?

Wingstop's strategic initiatives are also noteworthy. The company's international expansion, with over 2,500 locations, is a key driver of long-term growth. The upcoming launch of a loyalty program, leveraging data from approximately 60 million consumers, is expected to boost customer engagement and same-store sales, with benefits anticipated in 2026. Furthermore, menu innovation, such as the introduction of the Smoky Chipotle Rub, aims to attract and retain customers.

The company's second-quarter 2025 results demonstrated strong financial performance, with a 26.4% increase in revenue to $117.1 million and a 53.3% rise in adjusted earnings per share to $0.69.

Average unit volumes improved, and the company added 201 restaurants. Despite the deceleration in same-store sales growth, Wingstop remains optimistic about future prospects, particularly with the upcoming loyalty program and continued expansion efforts.