Credit Suisse Downgrades Darden Restaurants (DRI) to Neutral

November 29, 2016 7:44 AM EST
Get Alerts DRI Hot Sheet
Price: $78.60 -0.43%

Rating Summary:
    13 Buy, 22 Hold, 3 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 21 | Down: 36 | New: 11
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Credit Suisse downgraded Darden Restaurants (NYSE: DRI) from Outperform to Neutral with a price target of $72.00 (from $69.00), noting the stock has seen a ~2pt. P/E re-rate post-election and had already traded at a premium to low-growth casual dining peers.

Analyst Jason West commented, "DRI now trades at ~18x NTM P/E, up from ~15-16x several weeks ago. ~10% upside to today’s price would imply a P/E of ~20x, a threshold which DRI has rarely crossed in its ~20-year life as a public company. Conversely, ~10% downside implies a P/E of ~16x, still ~5-10% above DRI’s long-term average P/E of ~15x. DRI has also made significant progress in improving the earnings power of the business in recent years, via SSS re-acceleration and cost-cutting. However, this leaves limited room for further upside surprise in our view. DRI’s unit growth story is also limited by a relatively saturated core brand (Olive Garden) and no material international presence."

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 $73.93 yesterday.



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