Citi struggles to see how BJ’s activist will unearth new gains

Citi struggles to understand how Fund 1 Investments’ call for BJ’s Restaurants to explore strategic alternatives will unearth new meaningful profit gains for the company and/or potential strategic buyers “who are not already well aware of the brand.” Similar to many competitors, BJ’s has struggled with sales and profit volatility emerging from the pandemic, the analyst tells investors in a research note. However, the company’s recent sales and cost savings initiatives appear to be gaining traction, and along with easing inflation, BJ’s appears on track for more consistent profit growth ahead, says Citi. The firm notes that the restaurant landscape is “littered with activist campaigns that have yielded mixed results for shareholders.” The stock may react well in the near-term to these overtures, but Citi is not convinced this sustains over time, adds the analyst. Citi has a Neutral rating on BJ’s Restaurants with a $28 price target.