Jefferies turns cautious on Portillo's ahead of earnings

Joe Hendrickson

Portillo's (NASDAQ:PTLO [https://seekingalpha.com/symbol/PTLO]) is on watch after Jefferies downgraded the restaurant stock to a Hold rating after having it set at Buy.

Analyst Andy Barish and his team move to the sidelines on Portillo's (NASDAQ:PTLO [https://seekingalpha.com/symbol/PTLO]) while they wait for additional visibility into the growth algorithm and due to increasing uncertainty around the near-term same-store sales recovery. In addition, recent new store productivity was noted to shroud visibility into the targeted growth algorithm.

"We think visibility into the impending recovery remains limited, and recognize near-term challenges that management will need to work through in the near term with the new CMO now on board (i.e. positioning around value & promotions not akin to the brand historically), all of which remains somewhat obfuscated by some softness that continues to be observed across fast casual as promotional intensity continues to mount," warned Barish.

Jefferies lowered its 2026 EBITDA estimate to ~flat annual growth as it awaits further clarity around recent sales/traffic initiatives, the CEO succession, and new store performance. The price target on PTLO was cut to $6, reflecting a 9X multiple of the 2026 EBITDA estimate.

Portillo's (PTLO [https://seekingalpha.com/symbol/PTLO]) is scheduled to report earnings on November 4.

Shares of Portillo's (PTLO [https://seekingalpha.com/symbol/PTLO]) closed on Friday at $6.00 vs. the 52-week trading range of $5.99 to $15.78. Short interest on PTLO stands at 15.3% of the total float.

MORE ON PORTILLO’S

* Portillo's: On Shaky Footing As Sales Are Expected To Decline (Rating Downgrade) [https://seekingalpha.com/article/4828700-portillos-on-shaky-footing-as-sales-are-expected-to-decline-downgrade]
* Portillo's: Hot Dogs, High Hopes, And A Strategic Reset [https://seekingalpha.com/article/4823875-portillo-stock-high-hopes-strategic-reset-long-term-upside-potential]
* Portillo's: It's Now Trading At A Justifiable Level [https://seekingalpha.com/article/4820583-portillos-its-now-trading-at-a-justifiable-level]
* Portillo’s appoints chairman as interim CEO amid leadership transition [https://seekingalpha.com/news/4497463-portillos-appoints-chairman-as-interim-ceo-amid-leadership-transition]
* Portillo's lowers sales expectations as McDonald's focus on value weighs on the restaurant sector [https://seekingalpha.com/news/4493690-portillos-lowers-sales-expectations-as-mcdonalds-focus-on-value-weighs-on-the-restaurant-sector]