Analysts at BofA Securities initiate coverage of Texas Roadhouse Inc. (NASDAQ:TXRH) and Darden Restaurants Inc. (NYSE:DRI) with Buy ratings while downgrading Cracker Barrel Old Country Store Inc. (NASDAQ:CBRL).
BofA On Texas Roadhouse
Expectations for Texas Roadhouse’s same-store sales growth for the back half of 2022 seemed achievable and maybe even conservative, analyst Sara Senatore said in a note. The company is likely to witness margin tailwinds in fiscal 2023.
“TXRH comps track boxed beef prices closely at a 2-qtr lag, reflecting the delayed price transmission process from farmgate to retail shelves and underscores the strong value proposition offered when retail prices are high,” Senatore added.
The analyst established a price target of $96 for Texas Roadhouse.
BofA On Darden Restaurants
“The demand backdrop for Darden is benign if not favorable, in our view, as industry capacity, income, and food budget share shifts have tilted in favor of full-service restaurants post-pandemic,” analyst Katherine Griffin said in a separate note.
“Darden is well-positioned to capture volume growth in all forms, whether it comes from off-premise channels or pent-up demand for both affordable and indulgent dining occasions,” she added.
Analyst griffin has a price target of $145 for Darden Restaurants
BofA On Cracker Barrel Old Country Store
Analyst Sara Senatore downgraded the rating for Cracker Barrel from Neutral to Underperform, while reducing the price target from $108 to $94.
Although the company has performed well over time, which reflects “both its unique business model (restaurant and retail) and core restaurant equities of value, innovation, and convenience,” near-term headwinds “continue to build for CBRL customers,” Senatore wrote in the downgrade note.
“Our concern is that despite these company-specific initiatives, CBRL will find it difficult to fully offset the forces buffeting its guests, who are both older and lower-income than average,” she added.
Price Action: Shares of Texas Roadhouse and Darden Restaurants had risen, while Cracker Barrel’s stock was trading lower at the time of publication Monday.
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