Analyst: Market may value a Save-A-Lot spinoff

Market may value a Save-A-Lot spinoff

Macquarie Capital analyst Bob Summers initiated coverage of Eden Prairie-based Supervalu Inc. on June 8 with a "neutral" rating and a 12-month price target of $9 per share.

"While we take comfort in the fact the stock is less 'expensive' on a relative basis, and sentiment seems generally cautious or worse," Summers wrote, "we have concerns over near- and intermediate-term stock price performance."

Since that initial report, the food distributor and grocery store operator reported better-than-expected first-quarter earnings on Tuesday and announced that it is considering spinning off its Save-A-Lot business into a stand-alone business.

"While it remains to be seen how much 'value' a spin would create, we believe the market will generally be optimistic toward a stand-alone Save-A-Lot's growth profile and attendant valuation," Summers wrote.

Summers maintained his "neutral" rating on Supervalu and its $9 price target.

Patrick Kennedy

Buffalo Wild Wings, the Golden Valley company that owns, operates and franchises casual restaurants under the same name, reported lower-than-expected second-quarter sales and earnings.

Still, the company's share price jumped.

The sales and earnings miss were due in part to increased food and labor costs, but the share price jump was attributed to growth prospects including the acquisition of some franchised restaurants in Texas, New Mexico and Hawaii.

Analyst Peter Saleh from the equity research department of BTIG has a "buy" recommendation on Buffalo Wild Wings.

Saleh writes that another growth driver for Buffalo Wild Wings is through tableside ordering through tablet computers. The company currently has tabletop tablets at 90 percent of its restaurants systemwide, he said.

"Management indicated that they have successfully tested full menu ordering on the tablets but will wait to roll out the functionality across the system until payment capability has also been added," Saleh wrote.

"Once fully implemented, we expect the tablets to increase average check and reduce labor as they allow servers to be more efficient," he said. "Server handheld devices for order-taking are also being tested, which would likely drive further labor efficiency if implemented."