Piper Jaffray 'Remains Buyers' Of Panera Bread On Digital Sales, Channel Checks

• Panera Bread Co. PNRA has seen a 19.11 percent increase in its share price over the past six months.
• Piper Jaffray’s Nicole Miller Regan has reiterated an Overweight rating and price target of $225 on the company.
• Channel checks suggest that the company’s “higher margin ancillary sales” are set to grow, while driving incremental cash flow.

Analyst Nicole Miller Regan explained that Piper Jaffray’s latest analysis suggest a 30 bps increase in Panera Bread’s royalty rate in 2H15, driven by the “ongoing shift towards digital sales.”

Also, an analysis of the company’s continuing CPG initiatives points towards categories such as refrigerated soup, salad dressing and mac & cheese contributing $0.07 per share at present, with about $175 million expected in retail sales for 2015. Regan expects the company to witness comps of over 3 percent for 3Q15.

“We see room for incremental SKUs in current categories and the opportunity for growth through new categories, increased distribution, and sales velocity over time,” Regan stated.

For the longer term, the company’s “overall broad-based strategies and tactics” are expected to lead to menu/marketing permission and pricing power, which in turn would lead to consistent comp momentum and stabilize the profitability trends at the store level.