Cheesecake Factory's Sales Recovery Turns Gordon Haskett Bullish

Cheesecake Factory Inc’s CAKE same-store sales have recovered and come with an improved mix, according to Gordon Haskett.

The Cheesecake Factory Analyst: Jeff Farmer upgraded Cheesecake Factory from Hold to Buy with a $38 price target. 

The Cheesecake Factory Thesis: The company’s same-store sales momentum could build further in 2021, Farmer said in the Friday upgrade note.

“CAKE will emerge from the COVID landscape with a higher margin revenue mix and leaner cost structure,” the analyst said. 

“CAKE is positioned to see a multi-quarter run of upward EBITDA and EPS revisions as the Street will likely continue to view CAKE as a show-me story given the concept’s late to develop SSS recovery progress,” he said. 

“CAKE’s balance sheet condition has quickly improved, with the company repaying almost $100 million on its revolving credit facility.” 

Gordon Haskett raised its Cheesecake Factory earnings estimates for 2020 and 2021 from a $1.16 loss to a $1.04 loss and from positive $1.01 to positive $2.03, respectively.

CAKE Price Action: Shares of Cheesecake Factory were up 1.3% at $30.33 at last check Friday.