Shares of ASX-listed Guzman y Gomez Ltd. (AU:GYG) surged over 4% today after UBS analyst Shaun Cousins upgraded his rating from Sell to Hold. UBS remains bullish on Guzman’s long-term prospects for new store growth in FY25. Cousins also raised his price target from AU$37 to AU$40, which is now similar to the current price level.
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Guzman y Gomez is a Mexican food chain with more than 200 locations across Australia, Singapore, the U.S., and Japan. The company made its debut on the ASX in June 2024 and has seen a 38% increase in its stock price since.
UBS Upgrades Guzman on Strong Earnings Potential
UBS has upgraded Guzman’s rating considering its strong earnings potential from the opening of new stores. The company has opened 15 new stores in the first half of FY25, with a forecast of 31 for the full year. Meanwhile, UBS remains optimistic about Guzman’s top-line growth driven by a new menu, which now includes breakfast, coffee, and value offers.
Additionally, UBS pointed out that the company’s EBITDA (earnings before interest, tax, depreciation, and amortization) margins are also strong, as its same-store sales growth is currently outpacing rental, labor, and other costs.
As a result, UBS raised its EBITDA forecasts by 2.2% for FY25, 5% for FY26, and 6.2% for FY27. Overall, UBS forecasts that Guzman Y Gomez could achieve AU$450 million in revenue and AU$30 million in earnings before interest and tax (EBIT) in FY25. In FY24, Guzman reported AU$342.2 million in revenue.
What is Guzman y Guzman Share Price Target?
According to TipRanks, GYG stock has a Moderate Buy consensus rating based on two Holds and one Buy assigned in the last three months. At AU$39.27, the average Guzman share price target is 2% below the current price level.
