- Raymond James analyst Brian M. Vaccaro thinks most restaurant stocks have strongly outperformed YTD due to a combination of the broader risk-on trade gaining traction and improved industry demand trends in January following softer trends in December.
- As has been the case for a few quarters now, the analyst continues to lean less negatively on the U.S. consumer backdrop and will remain focused on two primary drivers of demand growth through ’23.
- The drivers are aggregate job and wage growth and the burn rate of excess savings, which the analyst believes remains a buffer to spending among middle/upper income consumers.
- The analyst has downgraded Cheesecake Factory Inc CAKE and Dine Brands Global Inc DIN to Market Perform.
- On CAKE, the analyst’s 2023 EPS estimates remain below consensus, reflecting continued concerns regarding the company’s ability to recover pre-COVID margins.
- On DIN, the stock now trades in-line with its historical valuation range, and the analyst is mindful of two risks that could limit further upside.
- The risks include Applebee’s could cede some of its pandemic share gains as some national competitors increase advertising spend, and the company needs to refinance $700 million of securitized notes, negatively impacting EPS.
- The analyst reiterated a Strong Buy rating on Dave & Buster’s Entertainment Inc PLAY and Bloomin’ Brands Inc BLMN, which also remains as the analyst’s top two stock ideas.
- Both trade at depressed valuations and have idiosyncratic drivers in 2023, the analyst reasoned.
- The analyst reiterated an Outperform rating on the shares of Brinker International Inc EAT and expects strong Q2 results reflecting solid traction in the early stages of management’s turnaround plan.
- The analyst reiterated a Market Perform rating on the shares of Shake Shack Inc SHAK.
- While commodity inflation has been hotter for longer, in part due to a few unexpected (temporary) spikes in certain categories, the analyst expects y/y COGS inflation to moderate for most companies through 2023.
- Price Action: PLAY shares traded lower by 1.71% at $41.40 on the last check Tuesday.
- Photo Via Company
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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