Bloomin' Brands Faces Downgrade By This Analyst Amid Concerns About Consumer Spending

BMO Capital analyst Andrew Strelzik downgraded Bloomin’ Brands Inc BLMN from Outperform to Market Perform and lowered the price target from $29 to $26.
The analyst said BLMN is among several lower multiple casual dining stocks to meaningfully outperform thus far in 2023.
Stronger shares coincide with acceleration in January foot traffic for BLMN and peers, though trends likely will normalize in the coming weeks, added the analyst.
Foot traffic at Outback Steakhouse accelerated from 13% year-over-year decline in 4Q22 to 8% growth thus far in January, cited the analyst.
Also, the analyst added that Carrabba’s strengthened from 12% decline in 4Q22 to 7% growth quarter-to-date.
The analyst said the recent strength reflects, in part, favorable weather and cycling the spread of the Omicron variant last year.
Among recent data points, a new Technomic survey indicates consumer behaviors are changing even if industry data does not show it yet, noted the analyst.
Recent industry conversations highlight that consensus 2023 restaurant margin forecasts likely are too optimistic as a starting point for some casual diners.
Consensus currently implies flattish restaurant margins in 2023 (15.2%) relative to 2022 (15.3%), which could be a challenge given BLMN’s prior commentary around the potential for mid- to high-single digit food inflation and lingering labor/other operating cost pressures, said the analyst.
The analyst specified that if BLMN had not yet locked beef exposure, the recent inflection in steak prices could create an incremental margin risk in 1H23.
Also Read: Raymond James Sees Mixed Q4 Earnings Signals For US Restaurant Stocks
Price Action: BLMN shares are trading lower by 0.73% at $23.23 on the last check Wednesday.
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