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On Monday, Loop Capital adjusted its outlook on FAT Brands Inc. (NASDAQ:FAT), reducing the price target to $10 from the previous $12, while still recommending the stock as a Buy. The decision follows FAT Brands’ first-quarter earnings report, which revealed weaker-than-anticipated comparable sales and EBITDA. According to InvestingPro data, the company currently trades at an EV/EBITDA multiple of 133.7x, suggesting a premium valuation despite recent challenges.
FAT Brands’ adjusted EBITDA for the first quarter of 2025 was reported at $11.1 million, falling short of Loop Capital’s projection of $17.8 million and showing a decline from the $18.2 million reported in the same quarter of the previous year. Comparable sales saw a 3.4% decrease in the quarter, slightly worse than the predicted 3.0% drop. Moreover, consolidated revenues for the quarter stood at $142.0 million, marking a 6.5% year-over-year decrease and missing the forecasted $151.6 million. Despite these challenges, the company maintains a notable 20.36% dividend yield, though InvestingPro analysis indicates the company is currently burning through cash rapidly.
Despite these figures, Loop Capital maintains a positive stance on FAT Brands, continuing to endorse the stock with a Buy rating. The reduced price target of $10 is grounded on approximately 22 times the research firm’s revised 2025 enterprise value to EBITDA (EV/EBITDA) estimate for the company. For deeper insights into FAT Brands’ valuation and 7 additional key ProTips, check out the comprehensive analysis available on InvestingPro.
The first-quarter performance presents a challenge for FAT Brands as they navigate a period of softer sales and revenue contraction. With a market capitalization of $49.21 million and trailing twelve-month revenue growth of 10.63%, the company’s ability to adapt and improve its financial metrics will be closely watched by investors and analysts alike as the year progresses.
In other recent news, FAT Brands Inc. reported a challenging first quarter for 2025, with a net loss of $46 million or $2.73 per diluted share, missing analyst expectations of -$0.936. Revenue also fell short, coming in at $142 million compared to the forecasted $151.6 million, marking a 6.5% decrease from the previous year. Despite these financial setbacks, the company plans to open over 100 new locations in 2025, aiming for significant growth through these expansions. The company has also been focusing on strategic initiatives such as co-branding and international expansion to improve future performance. In other developments, FAT Brands spun off Twin Hospitality Group Inc., allowing shareholders to invest directly in Twin Peaks’ growth. Analysts from Loop Capital Markets and Noble Capital Markets have shown interest in the company’s strategic moves, particularly the refranchising of Fazoli’s and the utilization of the Georgia production facility. The company is committed to raising $75-$100 million in equity this year, focusing on debt reduction and leveraging growth opportunities. Additionally, FAT Brands is exploring refinancing options to improve its financial flexibility.
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