Wingstop stock just got massive analyst upgrades — Here’s why

A new smart kitchen system could be a game changer for the restaurant chain.

Wingstop (NASDAQ: WING) stock was one of the top gainers on Wednesday, rising 7% after getting a slew of price target upgrades from Wall Street analysts.

Analysts were mainly bullish about a new technology-enhanced efficiency platform that the chicken wing chain detailed in an investor presentation delivered on Tuesday.

The innovation that so impressed analysts is called Smart Kitchen, which the company describes as a “game changer for our guests and restaurant operations.”

The Smart Kitchen platform has been pilot tested at more than 200 restaurants, and the chain is now preparing to roll it out more broadly.

The smart kitchen concept employs proprietary artificial intelligence technology to anticipate demand at any given time, in 15-minute increments. To do so, it uses more than 100 different data points including historical sales, weather patterns, local events, sports, the academic calendar, and other forecasting data to help staff prepare orders in advance.

In pilot testing, the intuitive smart kitchen technology cut order time in half. That, in turn, should increase the number of transactions and lead to higher customer satisfaction rates and repeat customers.

“We’re going to be able to not only increase speed, but be more consistent,” Michael Skipworth, Wingstop CEO and president, told analysts at the investor presentation, reported . “We believe it’s going to make Wingstop more of the consideration set. It’s going to unlock some unmet demand. And we believe over time it’s going to help us continue to increase frequency, which we know will be a big driver as we continue to scale AUVs [average unit volumes] toward $3 million.”

Skipworth added that it will improve the competency of team members and increase productivity.

Analysts are impressed by new AI technology

Wingstop got several price target upgrades from analysts, most of whom cited the transformational potential of the smart kitchen system.

“We came away impressed by the new system. The power of the Smart Kitchen system appears to be a ‘game changer,” Chris O’Cull, analyst at Stifle, said, reported Barron’s.

Todd Brooks, analyst at Benchmark, added that the system should fuel delivery growth and accelerate Wingstop toward its goal of $3 million annual average store sales, up from the current $2.1 million.

Analysts at Barclays boosted Wingstop’s price target from $310 per share to $360 per share, with its price target raise fueled by the smart kitchen concept. That would suggest 18% upside from its current price of $306 per share.

BofA also raised its target by $41 per share to $360 per share and maintained its buy rating. BofA analyst Sara Senatore said the smart kitchen should lead to performance improvements and cost savings and lead to greater efficiency.

TD Cowen, Wells Fargo and Guggenheim also boosted their targets for Wingstop on Wednesday. Wells Fargo lifted it to $320 per share while Guggenheim bumped it up to $325 and TD Cowen raised it to $330 per share.

Wingstop stock currently has a median price target of $319 per share, but this should move up based on these new updates. The stock is up 9% YTD but has a high P/E of 48.