Darden Restaurants (DRI) PT Raised to $195 at Mizuho

Mizuho analyst Nick Setyan raised the price target on Darden Restaurants (NYSE: DRI) to $195.00 (from $185.00) while maintaining a Neutral rating.

The analyst commented: "F2Q's SSS growth upside at both OG (4.7% vs. 3.7% cons.) and LH (5.9% vs. 4.0% cons.) was not enough to offset higher-than-expected commodity inflation, resulting in an EPS miss ($2.08 vs. $2.10 cons.) on lower-than-expected restaurant-level margins (18.5% vs. 19.1% cons.). While SSS growth guidance for the year was increased, EPS guidance was reiterated. The lack of labor and other OpEx leverage further reduces NT margin visibility. However, as menu pricing, particularly at LH, increases towards the MSD range in FQ4, it increases both our F27 SSS growth estimate and limits the potential margin headwind in F27. We lower our F26/F27 UL margin estimates to 20.0%/20.2% from 20.2%/20.4%, but raise our F26/F27 EPS estimates to $10.55/$11.49 from $10.48/$11.22. Increase PT to $195 from $185 and maintain Neutral rating."

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