Merrill Lynch upgraded Brinker International’s stock to Hold from Sell amid optimism on the company’s Chili’s business and new “It’s Just Wings” sales channel.
Last week, Brinker International (EAT) reported lower-than-expected 4Q sales and disappointing same-store sales results. Merrill Lynch analyst Gregory Francfort, who maintained a price target of $40 (9.1% upside potential) pointed out that the restaurant chain operator’s same-store sales have outperformed its peers.
Francfort noted that the company’s Chili’s business is doing well amid reduced competitive pressure as the economy is reopening. The analyst is also encouraged by the company’s first virtual restaurant brand “It’s Just Wings” and forecasts a “high 90% per unit sales recovery” in its sales channel in 2021 versus 2019.
Meanwhile, Deutsche Bank analyst Brian Mullan upgraded Brinker to Buy from Hold with a price target of $46 (25.5% upside potential) on Aug. 17.
The restaurant chain operator reported a better-than-expected 4Q loss of $0.88 per share, as the company benefited from increased demand for takeout and delivery during the COVID-19 pandemic. Analysts had anticipated a loss of $1.37 per share. Its 4Q revenues declined 32.5% year-over-year to $563.2 million versus Street estimates of $572.9 million. Same-store sales dropped 36.7% in 4Q.
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 9 Buys, 6 Holds and 1 Sell. Given the year-to-date decline of 11%, the average price target of $36.88 now implies that shares are fully priced. (See EAT stock analysis on TipRanks).
Related News:
Wedbush Sticks To Hold On Nordstrom Ahead Of 2Q Results
Barclays Lifts NetEase’s PT On Gaming Sales Growth Bet
Truist Raises Yelp’s PT On ‘Balance Sheet Strength’
