Barclays Maintains an 'Overweight' on Darden Restaurants (DRI); Acquisition Slightly Puzzling, But Feels Like Good Fit

July 13, 2012 3:30 PM EDT Send to a Friend
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Price: $55.78 +1.44%

Rating Summary:
    8 Buy, 20 Hold, 3 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 8 | Down: 12 | New: 23
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Barclays maintains an 'Overweight' on Darden Restaurants (NYSE: DRI) price target of $57.00.

Analyst, Jeffrey A. Bernstein, is a little puzzled by Darden's move to acquire Yard House. DRI already has three powerhouse brands, so what's the risk/reward in making this smaller acquisition. All in, Bernstein believes Yard House fits well in the company's portfolio and despite it being dilutive in FY13, it should become accretive in FY14. Also Yard House has good bar operations and targets a younger demographic. So despite macro issues causing volatility in casual dining, Darden should still be able to effective manage business.

FY13 EPS estimate lowered from $3.90 to $3.80, but FY14 maintained at $4.40.
For an analyst ratings summary and ratings history on Darden Restaurants click here. For more ratings news on Darden Restaurants click here.

Shares of Darden Restaurants closed at $50.20 yesterday.


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