Based on anticipated sales declines and loss in market share, Susquehanna believes Sonic (NASDAQ:SONC) will miss on their EPS in the first quarter of 2011, and a loss of market share.
Susquehanna said, "We anticipate a slight EPS miss in FY1Q11 ($0.09 vs. the consensus of $0.10) when SONC reports on January 4 after the market close, but we note low top-line visibility. Improving economic activity in Texas supports higher SSS on a sequential basis (-2.5% estimated vs. -6.4% in FY4Q10), but we still anticipate sales declines due to market-share losses and value-sensitive consumers. Although we expect SSS to improve sequentially, resulting in 1% SSS in FY11 vs. -7.8% SSS in FY10, we view this improvement as fully priced into the stock."
Susquehanna maintains a "Neutral" on Sonic, which closed level on Friday, at $10.12. Susquehanna has a price target of $9 on them.
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