Goldman Sachs Q2 Preview on Restaurants: Favoring CMG, DNKN, MCD, EAT

July 16, 2012 3:25 PM EDT
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Price: $405.20 -0.9%

Rating Summary:
    15 Buy, 19 Hold, 8 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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Goldman Sachs Q2 Preview on Restaurants

Analyst, Michael Kelter, continues to favor Quick Service Restaurants (QSR) heading into Q2 earnings...seeing mid-single-digit same store sales growth. Kelter sees the most upside in Chipotle Mexican (NYSE: CMG), Dunkin' (Nasdaq: DNKN) and McDonald's (NYSE: MCD)

As far as casual dining, Kelter expect a deceleration in SSS trends to the lowest level
since the trough of the recession in 2009. He sees DineEquity (NYSE: DIN) possibly disappointing on weaker sales at Applebee's and IHOP. Brinker International (NYSE: EAT) could be heading with a Q2 beat and/or possible dividend increase.

Also this morning, Goldman upgraded Cheesecake Factory (Nasdaq: CAK) from Sell to Neutral and simultaneously downgraded Tim Horton's (NYSE: THI) from Neutral to Sell.

For Q2, Goldman sees DNKN coming in at $0.36, CMG at $2.47, DIN at $1.04, THI at $0.71, Sysco (NYSE: SYY) at $0.55, YUM Brands (NYSE: YUM) at $0.71, Wendy's (NYSE: WEN), Panera (Nasdaq: PNRA) at $1.45, Domino's Pizza (NYSE: DPZ) at $0.47, CAKE at $0.49, EAT at $0.58, Teavana (NYSE: TEA) at $0.02, Darden (NYSE: DRI) at $1.15, Starbucks (Nasdaq: SBUX) at $0.45 and MCD at $1.37.

Goldman maintains a Conviction-List Buy rating on CMG, but lowers FY13 EPS estimate from $12.32 to $12.14. Price target lowered from $485 to $475.

Conviction-List Buy rated SBUX FY13 EPS estimate lowered from $2.36 to $2.29. PT lowered from $66 to $63.

Buy rating DRI sees FY13 lowered from $4.03 to $3.95. PT lowered $1 to $57.

Neutral rating DIN sees FY13 lowered from $4.32 to $4.12. PT cut from $54 to $47.

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