Wedbush analyst Nick Setyan downgraded the shares of Dine Brands Global Inc (NYSE:DIN) from Outperform to Neutral and lowered the price forecast from $47.00 to $28.00.

Despite shifting focus to value with price certainty, visibility into same-store sales (SSS) growth remains limited, notes the analyst.

While the analyst had hoped that the introduction of the Really Big Meal Deal at $9.99 would significantly boost Applebee’s SSS growth, the results have been underwhelming. Similarly, it is doubtful that IHOP’s focus on value has meaningfully improved its SSS growth.

The likelihood of improvement in AB and IHOP unit growth trends is decreasing, per the analyst. Due to ongoing pressures on SSS growth and margins at both brands, the analyst now sees a potential risk to their 2025 unit growth projections, and the chances of a rebound in DIN’s unit growth trajectory after 2025 are diminishing.

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The franchised model limits the impact on EBITDA, but a gradual annual decline has become the most likely scenario, given the sales growth outlook based on negative low-single-digit annual net unit growth and the current SSS growth trend, noted the analyst.

While the analyst was hopeful in October 2024 that a drop in interest rates and a shift towards aggressive value strategies would improve the company's trajectory, leading to stable or positive EBITDA, neither of these factors played out as expected.

As a result, the analyst can no longer rely on significant stock repurchases as a catalyst after the mid-2025 refinancing of $594 million due in June 2026. The analyst lowers the 2025 EPS estimate to $5.83 from $6.18.

Although DIN is currently trading at a discount compared to both its historical multiples and its peers, the analyst no longer anticipates any positive catalysts in the short to mid-term.

The price forecast is based on a 5.8x EV/EBITDA multiple on 2025 EBITDA estimate, a ~45% discount to DIN’s median 5-year pre-COVID multiple of 10.7x.

Price Action: DIN shares are trading lower by 1.70% at $25.38 at last check Friday.

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This article Dine Brands Lacks Clear Catalysts, Analyst Downgrades Stock And Cuts Price Forecast By 40% originally appeared on Benzinga.com

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