Oppenheimer initiates coverage with a Buy rating and an US$11 price target. They believe that "JMBA is one of the few opportunities today to offer sizable sq. foot growth, revenue and earnings growth, all with several years of visibility."
- Only true nationally recognized smoothie brand. Potential exists for company to reach the 5,000 store mark.
- Revenue and profit growth should be enhanced by existing franchise partnerships, and licensing agreements with mass retailers such as Safeway, Target, and Whole Foods. As well as with the launch of a ready serve product.
- Company targeting EBITDA margins of more than 10%, and a significant improvement in operating margins over the next several years (current EBITDA margin is closer to 5%).
- Revenue and margins expected to be enhanced with the expansion of in-store offerings, such as a wider variety of warm and cold food.
- Strong global trend of adopting healthier lifestyles should support market penetration.
- Price target assumes an EV/EBITDA multiple of 25x on 2008 estimates. On an EV/Sales basis JMBA trades at 1.7x 2007 estimates.
1 comment:
I also love Jamba and believe strongly in it's potential for growth. I wanted to ask you what you thought about SRR. Lately Keds shoes has had a successful marketing strategy and their distribution seems to have increased markedly. However, it appears that the stock has actually gone down in recent months. Is this because Stride Rite stores are not performing in line with one of their largest products? Is this a stock worth considering or are Keds only making a temporary blip of a comeback?
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