Guzman y Gomez Ltd (ASX: GYG) shares are the focus point for investors, analysts, and even the media this week.
The company's share price experienced a shocking 18.2% nosedive on Friday to an all-time low of $23.70 a piece. The company's worst intra-day session came after terrified investors sold up following its FY25 financial results announcement.
At the close of the ASX on Tuesday, the share price had recovered 9.7%. It's positive, but the share price still has a long way to go before it returns to pre-Friday sell-off levels. Over the year, the share price is still down a disappointing 29.7%.
Guzman y Gomez made its ASX debut in June 2024, marking the largest listing in Australia in three years.
Market commentators are on the edge of their seats to see how Guzman y Gomez shares unfold this week.
Image source: Getty Images
Let's take a quick recap…
The Mexican-inspired quick-service restaurant operator and franchisor posted a 23% year-on-year increase in global reported sales. It also recorded a 45.5% increase in EBITDA, and a 151.8% surge in net profits after tax (NPAT).
This meant Guzman y Gomez was able to announce a maiden dividend, with investors set to receive a fully franked payout worth 12.6 cents per share.
But investor optimism was dampened by news of the comparable sales growth numbers in Australia.
The Australia Segment, including Singapore and Japan, achieved 9.6% comparable sales growth, $1,168 million in network sales, and $66 million in segment underlying EBITDA.
But, in the first 7 weeks of the financial year, network sales in Australia grew just 3.7%. This is sharply lower than the 7.6% H1 growth forecast by Visible Alpha consensus.
On Monday, 45% of Guzman y Gomez shares (46 million shares) were released from escrow arrangements as part of its Australian ASX listing process. These shares were tied to major shareholders like TDM and Barrenjoey and became tradable following the company's full-year results .
What do analysts think about Guzman y Gomez shares?
According to TradingView data, analyst sentiment on the stock is mixed. The data shows 7 out of 12 analysts still hold a buy or strong buy rating on Guzman y Gomez shares. Another 2 analysts hold a hold rating, and 3 hold a sell or strong sell rating.
The target price is an average of $28.90 and a maximum of $36.00, which represents a potential upside from the time of writing of 11.13% to 38.41%, respectively.
Yesterday, the team at Morgans announced they have retained their buy rating on the restaurant operator's shares with a reduced price target of $30.60.
In a note to investors, Morgans said Guzman y Gomez delivered a full-year result that was softer than expected and an underwhelming trading update for the first quarter of FY 2026.
But it also said the company appears to be confident that improvements are on the way thanks to a variety of marketing initiatives, menu changes, and company expansion plans.
What should investors do now?
Morgans thinks that the recent share price weakness is a buying opportunity for investors, and I'd agree.
The sell-off might have been a little overdone given the company's expansion and innovation plans. Even Morgans thinks the FY26 guidance will likely be lower than actual numbers.
My tip? Look at the company's long-term fundamentals and decide whether this dip presents a great buying opportunity.
