Brinker downgraded to Underweight at Morgan Stanley on modest pricing power

As previously reported, Morgan Stanley downgraded Brinker (EAT) to Underweight from Equal Weight with an unchanged price target of $36. The firm doesn’t find the risk-reward skew as attractive right now with patience still required for the turnaround story to play out, the analyst tells investors. Like with Cheesecake Factory (CAKE), the firm think the “discretionary occasion” restaurant likely still struggles in 2024 compared to the overall industry and more modest same-store sales growth and pricing power could mean that Brinker has a harder time offsetting cost inflation and expanding margins, the analyst tells investors added.