BMO Capital downgrades Wendy’s to market perform

Shares of Wendy’s Co (NASDAQ: WEN) are unlikely to recover much in the near term, said a BMO Capital analyst on Monday. The stock is down 15% for the year.

Andrew Strelzik reveals a $22 price target on WEN

In a note this morning, Andrew Strelzik downgraded WEN to “market perform” and slashed his price target to $22 a share that represents hardly a 5.0% recovery from here.

According to the senior analyst, inflationary pressures will likely weigh on discretionary spending – a macroeconomic environment that Wendy’s is not well-positioned to withstand. Consequently, it’ll be difficult to meet comparable growth and margin expectations. He wrote:

Chad Morganlander agrees with the bearish call

On CNBC’s “Power Lunch”, Washington Crossing Advisors’ Chad Morganlander agreed with the bearish call and said Wendy’s is a lower quality name in the food space that he’d rather avoid at present.

Wendy’s revenue remained roughly the same in its fiscal fourth quarter on a year-over-year basis. It is expected to report its Q1 results on May 11^th. The stock trades at a PE multiple of 22.90.