Investment firm Baird released an update for Potbelly stock on Thursday, following upbeat earnings. The firm has raised its 2016 EPS estimates on the back of solid top line drivers and strong guidance

Potbelly Corp (NASDAQ:PBPB) which operates a chain of sandwich joints reported strong fourth quarter earnings on Tuesday after the market closed. Following upbeat earnings, investment firm Baird released an update on Thursday, re-iterating its bullish outlook for the stock that jumped more than 9% on the day following earnings report (Wednesday).

Baird analysts re-iterated an Outperform rating on the stock and a $16 price target which reflects an upside of 31.6% from Thursday’s close price of $12.16. Backed by healthy fourth quarter performance, a strong initial outlook for 2016 laid out by the company, and attractive valuation, the firm has maintained a strong outlook for the fast casual restaurants operator.

For the fourth quarter, Potbelly reported adjusted earnings per share (EPS) of eight cents, against a consensus Wall Street analysts’ estimate of six cents, and Baird’s own estimate of seven cents. Operating margin for the quarter climbed 79 basis points or 3.9% from the same quarter last year, more than the consensus operating margin estimate of 3.2%. restaurant level margin jumped 147 basis points, well above Baird’s own estimate of an 80 basis points growth.

Potbelly’s fourth quarter revenue came in 12.1% higher over the comparable quarter last year to $95.1 million. That beat the Street’s estimates calling for revenues to grow 11.9% and Baird’s own, calling for a 10.6% jump. Strong revenue growth was in part buoyed by impressive same store sales which grew 3.7% year over year.

The company’s CEO Aylwin Lewis said the management and the company were on track with the new unit development program. Potbelly opened 12% more, that is 53 new shops during fiscal year 2015, 43 of which are under the company’s ownership.

Going forward, the company said it expects to open an additional 55 to 65 stores in 2016, and expects adjusted EPS to clock in between 33 cents and 36 cents, significantly higher than 2015 annual adjusted EPS of 20 cents. Annual same store sales are projected to grow in the range of 3.5% and 4.5%.

Potbelly did not provide specific commentary on same store sales growth for the first quarter so far but the company did hint on slightly adverse developments affecting the metric amid adverse weather conditions and the Easter shift. Baird however believes the overall commentary appears strong and indicative of stronger results in the forthcoming quarters.

Baird analysts point to the company’s focus on innovative menu items, growing catering business and marketing initiatives – all of which could continue to propel the company’s revenues and profit margins in the future. The investment firm sees Potbelly’s annual EPS this year coming in three cents higher than the earlier prediction of 37 cents. The firm also estimates next year’s EPS at 47 cents.