Jack In The Box Inc. (NASDAQ:JACK) received a downgrade from Truist on Monday, as the brokerage flagged mounting challenges in the company’s same-store sales performance and expressed skepticism over the fast-food chain’s current turnaround efforts.
Truist lowered its rating on the stock from Buy to Hold and slashed the price target to $22 from $51, citing persistent underperformance in sales metrics that have clouded the valuation outlook.
According to Truist analysts, the downgrade stems largely from concerns that Jack In The Box continues to fall short in delivering consistent same-store sales growth, which is a key benchmark in the fast-food sector.
“A large real estate sale could create significant shareholder value, but we do not believe that is being contemplated,” the firm stated, referencing speculation around possible asset monetization strategies.
Truist also expressed doubt over the impact of the company’s recently announced “Jack-on-Track” recovery strategy, saying, “We do not expect JACK’s ‘Jack-on-Track’ turnaround plan– which was announced in April– to create significant shareholder value.”
The analysts emphasized that the company needs more than financial maneuvering to get back on track: “Jack is in need of a strategic plan to drive operations,” Truist noted, suggesting that deeper structural reforms are required beyond existing restructuring efforts.
Adding to the bearish outlook, the brokerage highlighted that Jack In The Box has been underperforming its burger chain competitors for roughly seven consecutive quarters. Internal data reviewed by Truist also indicated that the first half of May showed a further softening in performance.
Concerns were also raised about JACK’s menu innovation and marketing strategy, which Truist believes are lagging behind competitors in the space. The note pointed to a lack of urgency from management in executing necessary operational changes.
Nonetheless, Truist acknowledged that some upside potential remains. “Other upside catalysts could be from management having a better turnaround plan than signaled, plans for more real estate monetization than anticipated, and bigger-than-expected returns from the sale of Del Taco.”
The downgrade also comes against the backdrop of a broader slowdown in U.S. consumer spending, particularly among lower-income demographics – a segment that forms a significant portion of Jack In The Box’s customer base.