2245 GMT [Dow Jones]--Barrenjoey remains hungry for shares of Mexican food chain Guzman y Gomez, pushing back on concerns of some investors that its valuation is too rich. Analyst Tom Kierath sees scope for Guzman y Gomez to open more stores in Australia, which would support future profits. "Current levels of profitability are relatively low compared with steady state levels," Barrenjoey says. It thinks margins from franchised and corporate store operations are understated, and that general and administrative costs should fall as a percentage of sales over time. "U.S. losses are not deductible in Australia," Barrenjoey adds. That means the tax rate is high at some 55% in FY 2025 compared to the 30% corporate tax rate, the bank says. It retains an overweight call on Guzman y Gomez, which ended Monday at A$32.38. (david.winning@wsj.com)
(END) Dow Jones Newswires
May 19, 2025 18:49 ET (22:49 GMT)
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