Monday August 28, 12:59 pm Eastern Time
Press Release
SOURCE: Deutsche Banc Alex. Brown
California Pizza Kitchen, Inc. - Deutsche Banc Alex. Brown's John Glass Initiates Research Coverage
NEW YORK, Aug. 28 /PRNewswire/ -- Deutsche Banc Alex. Brown analyst, John Glass, today initiated coverage on the shares of California Pizza Kitchen, Inc. (Nasdaq: CPKI - news; $24.06) with a BUY investment rating. California Pizza Kitchen operates 77 company-owned and 31 franchised units in a total of 22 states plus a handful of foreign locales.
Glass' positive investment opinion on the shares is based on the following
merits:
1. The company is a leader in "affordable upscale" casual dining, carving
out a niche for itself with its innovative food and affordable prices;
2. A 15-year track record has established California Pizza Kitchen as a
longstanding restaurant brand, not a fad;
3. Highly profitable multi-channel opportunities exist to leverage the
brand, such as the company's partnership with Kraft to develop pizzas
for the supermarket channel;
4. The growth potential is immense with unit potential estimated to be at
least 300-400 units versus the current store base of 108;
5. The company operates with an efficient business model that is not
reliant on any one food (pizza is just 1/3 of sales), daypart or
geographic region. Furthermore, food costs are among the lowest in the
industry at 22%;
6. The financial model is characterized by strong top line growth combined
with ongoing expense leverage and contributions from the wholesale
business. Cash-on-cash new unit returns are a solid 35%;
7. The industry is enjoying a strong macro backdrop marked by an aging and
affluent population, limited new capacity and a robust economy; and
8. The management team is experienced with an ownership stake of
approximately 20%.
``California Pizza Kitchen is NOT just another pizza chain, but caters to the disenfranchised casual diner looking for an alternative to the same old tired choices,'' said Glass. ``We view California Pizza Kitchen as one of the premiere casual dining stocks, with the right model, the right management, and the right momentum to become one of the future leaders in the industry.''
Glass arrives at a 6-12 month price target for the shares of California Pizza Kitchen of $30 by applying a 39.5x multiple to his FY01 EPS estimate of $0.75.
Deutsche Banc Alex. Brown identifies the US investment banking activities of DB Alex. Brown LLC (formerly BT Alex. Brown Incorporated) and Deutsche Bank Securities Inc., which are indirect subsidiaries of Deutsche Bank AG. With over e925 billion in assets as of June 30, 2000 and approximately 90,000 employees, Deutsche Bank offers its clients unparalleled financial services throughout the world. It ranks among the leaders in asset management, capital markets, corporate finance, custody, cash management and private banking. Deutsche Bank is divided into five major business units: Global Corporates and Institutions, Global Technology and Services, Asset Management, Corporates and Real Estates and Private and Retail Banking.
Deutsche Bank Securities Inc. maintains a net primary market in the common stock of California Pizza Kitchen, Inc.
Within the past three years, Deutsche Bank Securities Inc. or its wholly owned subsidiary, DB Alex. Brown LLC, has managed or comanaged a public offering of California Pizza Kitchen, Inc.
Information herein is believed to be reliable and has been obtained from sources believed to be reliable, but its accuracy and completeness cannot be guaranteed. Opinions, estimates, and projections constitute our judgment and are subject to change without notice. This publication is provided to you for information purposes only and is not intended as an offer or solicitation for the sale of any financial instrument. Deutsche Bank Securities Inc., DB Alex. Brown LLC, and their affiliates worldwide, may hold a position or act as market maker in the financial instruments of any issuer discussed herein or act as advisor or lender to such issuer. Transaction should be executed through a Deutsche Bank entity in the client's home jurisdiction unless otherwise permitted by law. Deutsche Bank Securities Inc., and DB Alex. Brown LLC, are members of NYSE and NASD. In the U.S. this report may be distributed either by Deutsche Bank Securities Inc., or DB Alex. Brown LLC. Interested parties are advised to contact the U.S. entity they currently deal with, or the U.S. entity that has distributed this report to them.
SOURCE: Deutsche Banc Alex. Brown
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